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When Can Your Clients Deduct Moving Expenses?

August 16 2016

The article below is aimed at consumers, but we thought our audience of agents--especially those specializing in relocation--would find it helpful. After all, agents get asked all kinds of questions by their clients, including advice on moving. This post summarizes when it's legal for homeowners to deduct moving expenses on their tax returns. Feel free to share it with your clients!

moving boxes family

Summertime is the time of year when people move the most. Moving is a lot of trouble and can also be very expensive. If you move to start a new job or to work at the same job in a new location, the cost can be tax deductible. To qualify for this deduction, you must satisfy two tests:

  • the distance test, and
  • the time test.

Distance Test

To deduct your moving expenses, your new workplace must be at least 50 miles farther from your old home than your prior job location. For example, if your old job location was three miles from your old home, your new job must be at least 53 miles from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home. If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home.

Time Test

If you're an employee, you must work full-time at your new job for at least 39 weeks the first year after the move. If you're self-employed, you must also meet this test. In addition, you must work full-time for a total of at least 78 weeks during the first two years at the new job site. If your tax return is due before you meet the time test, you can still claim the deduction if you expect to meet it. There are exceptions to these rules in case of death, disability and involuntary separation, among other things.

What Expenses You Can Deduct

If you qualify for the moving expense deduction, you can deduct all your reasonable moving expenses including:

  • the cost of packing and transporting your household good and personal effects
  • costs you incur to connect or disconnect utilities
  • the cost of storing your household goods for up to 30 days after the day your things are moved from your former home and before they are delivered to your new home
  • the cost of travel and lodging for yourself and family during the move, and
  • your car expenses if you move by car–you can either deduct your actual expenses for gas and oil, or deduct 23 cents per mile in 2015.

You cannot deduct any of the following expenses:

  • cost of meals while you move
  • expenses that are reimbursed by your employer that are not included in your income
  • any part of the purchase price of your new home
  • car tags or driver's license fees
  • expenses of buying or selling a home (including closing costs, mortgage fees and points)
  • expenses of entering into or breaking a lease
  • home improvements to help sell your home
  • loss on the sale of your home
  • pre-move house hunting expenses
  • refitting of carpet and draperies
  • return trips to your former residence
  • security deposits (including any given up due to the move), or
  • side trips for sightseeing during the move.

For more information on deductible and nondeductible moving expenses, refer to IRS Publication 521Publication 521Moving Expenses.

To view the original article, visit the MileIQ blog.