Tips for claiming
If you move to a new home because you started a new
job or changed your job location, you may be able to deduct your
moving expenses. This is true whether you work for someone else
or are self-employed.
For this great deduction, you must meet two tests:
the distance test and the time test. Don't worry, we have the crib
notes on what's needed to pass.
Moving expense deductions are only available for job-related
moves. Assume you lived in the city and decided to move to the suburbs.
If this move wasn't related to a change in jobs or job locations,
you can't deduct your moving expenses.
If you change jobs as well as residences, then your
new job location must be at least 50 miles further from your old
home than your old job location was. Let's say your old job was
five miles from your old home. You take a new job that is 60 miles
away -- and that's a heck of a commute. So, to cut down on the commute
to your new office, you move to a new house that's closer to the
What matters is that, in this example, your old job
was 5 miles away, and the new job is 55 more miles away.
Bingo! You get to deduct your moving expenses.
If you aced the distance test, you must determine
if you can satisfy the time test. Conditions for meeting this test
differ for employees and self-employed individuals. If you are an
employee, you must work as a full-time employee in the general area
of your new job location for at least 39 weeks of the first 12 months
you are in this new location. If you are self-employed, you must
work full-time in the general area of your new job location for
at least 39 weeks during the first 12 months and for at least 78
weeks during the first 24 months you are in this new location.
Many taxpayers haven't met this test by the deadline
for filing their tax return. How can they possibly deduct their
moving expenses? For example, if you moved at the end of 1999, it
is impossible to meet the time test until at least 39 weeks into
2000. Your tax return is due before the 39-week period ends. The
good news is that you can still deduct the expenses on your 1999
return as long as you truly expect to meet the 39-week test or,
if self-employed, the 78-week test.
If you later realize that you didn't meet the test,
you must either amend your 1999 return to delete the expenses or
include the amounts previously deducted in error as other income
on a subsequent year's return. On the other hand, if you didn't
deduct the expenses thinking that you wouldn't meet the time test
but later on you meet the test, you can amend the original return
to deduct the expenses.
Let's assume you meet the two basic tests. Now it's
time for the most important question: What can you write off?
You can deduct the reasonable expenses of moving your
household goods and personal effects and traveling to your new home.
There are several unique expenses that are deductible:
The cost of storing and insuring household
goods and personal effects for any 30-day period after they
are moved from the old home and before they are moved to the
Any costs of connecting or disconnecting
utilities required since you are moving household goods, appliances
or personal effects.
The cost of shipping your car and household
pets to your new home.
The cost of moving household goods and personal
effects from a place other than your former home (perhaps, your
Lodging expenses in the area of your former
home within one day of leaving the former home.
Travel and lodging expenses in the area
of your new home on the day you arrive.
If you drive your car to your new home, you can deduct
car expenses in one of two ways: either the actual expenses such
as gas, oil, parking, or tolls if you kept track, or the mileage
method assessment of 10 cents a mile.
Unfortunately, some major expenses don't qualify for
House-hunting expenses prior to the move
Temporary living expenses once you arrive
Expenses of buying or selling a home
Can't claim what you don't pay
Generally, if your employer reimburses your actual
moving expenses, the reimbursement isn't included in your taxable
wages. Since the reimbursement isn't taxable, the expenses aren't
deductible. However, taxable wages always include any reimbursement
of non-deductible moving expenses such as house-hunting expenses
If the employer's reimbursements exceed the actual
moving expenses, the excess is included in taxable wages. Similarly,
if the expenses exceed the reimbursement, the excess expenses are
Compute the deductible expenses on Form 3903, Moving
Expenses. Next, enter them on page one of your income tax return.
The deduction is an "above-the-line" write-off. In other words,
it reduces adjusted gross income. Unlike deductions such as home
mortgage interest and charitable contributions, you can take this
moving deduction whether you itemize or not.
-- Posted: March 22, 2000