How to Deduct Moving Expenses on Your Tax Return

Income Taxes, Personal Taxes, Taxes
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moving expenses

Moving is a hassle, but it can also get you a huge tax break — if you know the rules. Here’s the short version of what you should know about the moving expenses deduction:

  • Generally, your move has to be for work
  • You have to meet a distance test
  • You have to work full time for at least 39 weeks in the 12 months after you move
  • You have to itemize to claim the deduction
  • There are exceptions to the rules, especially for military and retirees

We have a handy tool to help you determine if your costs might be deductible, but read on to learn how the moving expenses deduction works.

The work rule

Sure, you can move to get away from your ex, but that won’t get you a deduction. For you to deduct moving expenses on your tax returns, your move must be “closely related” to the start of work in your new area. In most cases, that also means you can deduct only the moving expenses rung up within a year of starting that new job.

The distance test

Your new job has to be at least 50 miles farther away from your old house than your old job was. For example, if you quit a job that was 3 miles from your old house, your new job must be at least 53 miles from your old house for you to get the deduction.

Are Moving Expenses Tax-Deductible?

The time test

You have to work full time for at least 39 weeks in the first 12 months after a move in order to claim the moving expenses deduction. You don’t have to work for the same company for all 39 weeks, and the weeks don’t have to be consecutive — but you do have to work in the “same general commuting area,” according to the IRS.

Self-employed people have to work full time for at least 39 weeks in the first 12 months of a move and at least 78 weeks in the first 24 months of a move. You don’t have to be self-employed during all of those weeks; you could have a regular job and then start a business, for example. You can take the deduction in the first year while you’re working to meet the 78-week test.

Bottom line: If you move, take the deduction and move back right away, you’ll need to pay back the deduction on your tax return.

What you can deduct

Lots of moving expenses are deductible, so keep those receipts and see IRS Publication 521 for the full list of deductible expenses. Here are some of the big ones:

  • Movers
  • Nineteen cents per mile for driving your car to your new home
  • Hotel bills if you have to stop along the way
  • Utility hookups
  • Special transportation for pets
  • Storage fees

People tend to get overzealous with this deduction, however, says Ranae Heaven, a certified public accountant at Heaven & Associates in Norcoss, Georgia. For example, you can’t include:

  • Real estate closing costs and points
  • Car registrations and new licenses
  • Home improvements to help sell your house
  • House-hunting expenses
  • New carpets or draperies
  • Losses on the sale of your home
  • Security deposits

How relocation reimbursements work

Generally, if someone has reimbursed you for your moving expenses, you can’t deduct those expenses from your taxes. In some cases, that reimbursement money might count as taxable income. So if a company offers to pay for some or all of your moving expenses, for example, find out what kind of reimbursement plan is involved.

For tax purposes, there are two kinds of plans: accountable and nonaccountable.

Reimbursement plan typeAccountableNonaccountable
How it works
  • You have to account for your expenses to your employer in a reasonable period of time
  • You have to return excess reimbursements
  • You don’t have to account for your expenses to your employer
  • You don’t have to return excess reimbursements

Tax consequences
  • Your reimbursements for deductible expenses don’t count as income
  • Your reimbursements for nondeductible expenses count as income
  • Your reimbursements count as income
What can you claim?
  • Deductible expenses that your employer didn’t reimburse
  • Deductible moving expenses

If you deduct your moving expenses and then get a reimbursement in a later year, you may need to include that reimbursement in your income.

How to take the moving expenses deduction

In most cases, you’ll need to file Form 3903 to claim the moving expenses deduction. Your tax software or tax professional will walk you through the steps when doing your returns.

You also will need to itemize deductions on your tax return. That may mean more time spent on preparing your taxes, but it could mean a lower tax bill if this and other deductions add up to more than the standard deduction (learn more here about whether you should itemize).

Notable exceptions

As with most tax rules, there are exceptions. Here are three big ones.

Military

If you’re a member of the U.S. armed forces and your move was due to a military order and permanent change of station, you don’t have to satisfy the distance or time tests. You can deduct your unreimbursed moving expenses.

Retirees

If you are permanently retiring to the United States after working abroad, you don’t have to meet the time test. Your old job location and your former home must have been outside the U.S. If you already live in the United States, you retire, and then move to another part of the U.S. and stay retired, you can’t claim a moving expense deduction.

Survivors

If you’re the spouse or dependent of someone who worked outside the U.S. and that person dies, typically you can deduct moving expenses if you lived with that person and then move to the U.S. within six months of the death.

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