It’s a wonderful world. You can’t go backwards. You’re always moving forward. It’s the wonderful part about life. And that’s terrific. ~Harvey Fierstein
Although summer is when most of us think about relaxing, some people choose this time of year to make a major move to a new job in a distant place. There are a lot of reasons why this is an optimum time. Families see the new fall school session as a good time for students to change schools. Weather, too, is usually warm and dry as opposed to cold and snowy—who wants to drive through a blinding snowstorm into a strange city with unfamiliar roads?
Many times, but not always, your moving expenses can be deducted on your federal income tax. Does your move meet these criteria?
1. How far did you move for this new job? There is a goofy little formula you have to fill out to answer this. How far was your old home from your old job location? Once you have that number, add 50 miles to it and, if your new job is farther away than that number, you have met the first criteria. To clarify, your old job was 6 miles from your old home. Add 6 miles to 50 miles, and the resulting 56 miles is how far your new job has to be from your old home.
2. When did you start your new job? If you started your new job within 12 months of your move, it will probably qualify for a deduction.
3. Are you an employee or self-employed? Each category is treated differently here. For an employee, they must work a minimum of 39 weeks during the first 12 months in the new place. The weeks don’t have to be consecutive or for the same employer; you simply have to work that much during that time period.
If you are self-employed and moving to a new location, you will find the moving deduction rules somewhat confusing. The IRS defines a self-employed person as being the sole owner or a partner of a business. If you are, you then must work at least 78 weeks during your first two years in the new location.
Other Expenses, Allowed and Not
You can also deduct any transportation and lodging expenses incurred during the move for you and your family, but you cannot deduct any meals. In addition, you can deduct expenses related to the packing, crating, and moving your household goods to the new location. Sometimes, you are able to also deduct the necessary insurance and storage of these items. When you go to disconnect the utilities on your old home, keep the receipts. These expenses can be deducted.
Often employers will reimburse new employees for some of the moving expenses. You must report this reimbursement as income on your income tax. Also, you are not allowed to deduct any part of your new home purchase expenses as part of your moving expenses.
There are a number of conditions for each of these points, as well as numerous exceptions. This is the moving deduction simply stated. There are a number of rules and exceptions which apply. It is important to consult a tax specialist for the details. If you should run into trouble here, don’t hesitate to contact a tax lawyer, particularly Jeff Fouts, who specializes in helping people solve their tax issues.