6 Important Things to Know About Moving Expense Tax Deduction


In today’s ever-growing economies, getting some kind of tax support is always helpful. You may be able to deduct your relocation expenses on your taxes if you move. If you work as an employee or are self-employed at the new location, you may be eligible for the tax deduction, regardless of whether you have work lined up before you move. For further assistance, contact a professional tax support firm to solve all your other queries.

Form 3903, Moving Expenses, is where to report your expenses and deductions.

Here are a few important tax support related things to know about:

How to Be Qualified

To be eligible for the moving expense tax deduction, you will most likely need to meet three criteria. Your relocation must be close to your place of employment in terms of both time and distance, and it must pass both distance and time standards.

1.   Your Relocation Is Linked To The Commencement Of Your New Job

The first criterion simply limits your deduction to relocation expenditures incurred within one year of beginning employment, and your new house must be closer to your new job than your previous one.

To put it another way, you can get tax support in the form of deduction of any eligible costs you incur up to one year before and after you begin working.

You don’t need to have a new job lined up when you move, but if you want to deduct those expenses, you must start working at a new location within one year of moving. Furthermore, you cannot deduct relocation expenditures if you plan to stay at the same residence. Still, you can stay with the same employer if you’re relocated to a different location.

Unless your new employer compels you to live in your new home, your new home must be closer to your new employment. If you can show that your new residence reduces your commuting time, you are also excluded from this restriction.

For example, your new home increases your travel by 10 miles, but because it is in a less crowded section of the state, it reduces your daily trip by 20 minutes.

2.   Distance Measurement

In comparison to the first criteria, the distance test is quite simple. To deduct your moving costs, your new place of employment must be at least 50 miles farther from your old home than your old place of employment.

Consider these two scenarios:

1) Your daily commute from your old home to your old job was 30 miles each way, and your new job is 70 miles away from your old home. You don’t fulfill the distance test criteria because your new employment only adds 40 miles to your daily commute.

2) Your daily commute from your old home to your old job was 5 miles, and your new employment is 60 miles away from your old home. In this case, you would have increased your commute by 55 miles if you stayed in your last house; thus, you pass the distance test for the tax deduction.

3.   Time Test

Simply put, you must work full time for at least 39 weeks out of the first 12 months at your new location to pass the time test. The 39 weeks do not have to be consecutive, and you do not have to work for the same company, but you must commute in the same approximate region.

Do you work for yourself? If that’s the case, the 39-week time limit doubles, requiring you to work full-time for at least 78 weeks in the first 24 months following your transfer.

4.  Transfer Savings on State Tax Returns

Some states update their income tax rules automatically to match what the federal government does, while others update their rules by legislation, and a few go their way.

As a result, just seven states offered moving tax support (deduction and continued to exempt) moving payments from income as of July 2019:

  • Arkansas
  • California
  • Hawaii
  • Massachusetts
  • New Jersey
  • New York
  • Pennsylvania

Employer reimbursements were not taxed in Iowa in 2018, but they are today.

5.  Know What Expenses Are Deductible

If you pass all three standards and qualify for a moving expense deduction, the next step is determining what you can deduct. These items are deductible:

  • Professional moving services are available.
  • Renting a truck and equipment for a do-it-yourself move
  • Traveling by car consumes a lot of gas.
  • Supplies for packing (including boxes, packing tape, and packing blankets)
  • Insurance for relocating
  • Certain travel expenses, such as accommodation charges, are not refundable.
  • Storage for a maximum of 30 days between leaving your last house and moving into your new one.
  • Assistance with relocation

6.  Lastly, These Are Not Deductible

  • The price of purchasing or renting a property in your new neighborhood.
  • Expenses incurred as a result of terminating your lease or selling your house in your previous location.
  • Meals taken during the journey
  • Travel expenses for house shopping before your actual move
  • Expenses for which your employer has previously reimbursed you

Summing Up

Keep in mind that all of your deductible expenses must be related to a single trip. Only one of your moving-related journeys will be deductible if you make multiple trips.

After reading this essay, you should have generated some new concepts. On this page, you’ll find more suggestions: Guide to Moving Expense Deductions [Updated 2021]

6 Important Things to Know About Moving Expense Tax Deduction

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