Did You Move in 2010? How to Claim the Moving Expense Tax Deduction

You May be Able to Deduct Your Moving Costs

Did you move during 2010 to relocate for work? If so, you may very well qualify for a nice tax deduction on your moving expenses. But don’t get too excited just yet, because there are a few restrictions. Even so, if you’re eligible for the deduction you should certainly seek it out. The IRS has a two question test you must pass in order to qualify for this deduction:

  1. The 50 mile question. This means the distance from the new employer’s location to your old home must be 50 miles or greater than the distance to your old job. So if you lived 10 miles from work at your old job and your new office is 45 miles from your old home, you are out of luck since that is only a 35 mile differential.
  2. Was the move due to employment? The IRS requires that you are employed full time in the general area of your new job location for at least 39 weeks during the 12 months after you make the move. This means you are allowed to switch jobs as often as you’d like after the move. And if your employer transfers you again or even lays you off, the IRS won’t hold it against you and will waive the 39-week test.

If You Qualify

Once you qualify you need to be aware of what expenses can be deducted and which ones cannot. Generally speaking, deductible expenses are those directly related to the move such as packing material, boxes, insurance that protects items during the move, the cost of traveling to your own home one-way, and lodging costs with the exclusion of meals. If there are costs associated with disconnecting and reconnecting utilities from your old or new home, these are also included. The expenses it does not cover are those directly related to the sale or purchase of your homes. This includes, but is not limited to: closing costs, security deposits or if moving to a new state, vehicle registration or license costs.

If you’re self-employed, the rules are a little different. If you’re self-employed and move, you must first meet the deadline, but you must also work full-time at your place of business for 78 weeks in the first two years. They don’t have to be consecutive, but you will have to wait two years and make sure you have enough work in so that you can go back and claim the deductions.

Keeping Track of Expenses

Even if you aren’t sure if you’ll qualify, when it comes time to move, it pays to keep detailed records of all related expenses. So, keep those reciepts, and pay attention to all of the little things that add up. Moving can be a costly event, and there are a lot of little things you might not even think about.

As always, this might be something worth having a tax professional help you with. While it isn’t an overly complex issue, there might be things you overlook, or something that may snag your claim. Sometimes, the professional assistance can save you even more money or keep you from an audit. You can also do your taxes with the assistance of tax preperation software and it can walk you through the process.

For more detailed information and the form required: IRS Form 3903.

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About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.

2 comments
Jenna
Jenna

Too bad there isn't a tax break for those who are recent college graduates who moved out of their parent's homes in 2010...

philip
philip

I believe there is a clause in there that if your employer compensated you for any moving costs then you can not deduct anything at all.

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