Even though moving for a job can make your life better, it can still be challenging. The good news is that you can deduct the cost of moving (i.e. movers, storage, etc) from your taxes, as we found out when we recently moved. Before you take that deduction, here are some things to know:
1. Distance Requirements
To qualify for tax deductions, your new job must be at least 50 miles farther away from your current one. For example, you currently commute 10 miles to work. Your new job must be at least 60 miles away.
2. Employment Requirements
You must work for the same company at least 39 weeks out of a 12-month period. Keep in mind that the weeks you work do not have to be consecutive. You must be a full-time employee. However, you do not have to work a certain number of hours per week.
You can deduct your moving costs if you are a self-employed individual. However, the requirements are different. You must work for an entrepreneurial enterprise for 78 weeks out of a 24-month period. The weeks you work do not have to be consecutive.
3. Costs That You Can Deduct
You have up to one year to deduct the moving costs. You will need to keep track of your receipt to ensure that you meet the distance and timing requirements. Some of the costs that you can deduct include insurance fees, the cost of hiring a residential mover, storage, utility connection costs, disconnection costs as well as the cost of moving your personal property and household goods.
If you deduct storage cost, then you will only be able to deduct storage costs for 30 days.
The lodging and travel expenses may also be deducted. You can deduct airline and train ticket costs if you need to travel by train or plane to move. If you have to ship your car to another place, then the cost may be deducted. Additionally, if you have to drive your car, then you can deduct the cost. The 2017 rate is 17 cents per mile.
4. How to Claim Your Deductions
You will be able to claim your deductions during the year that you move. This is one of the few deductions that you can claim without knowing whether the requirements are satisfied. However, many people do not satisfy the requirements until the following year.
You will need to use an IRS Form 3903 to claim your deductions. If you do not satisfy all of the requirements in one year, then you will have to reverse the deductions. You may have to report the deductions as other income on next year’s tax return. You may also have to amend the original tax return and exclude the deductions.