How to Add a Rent Deposit as a Moving Expense
If you have been offered a job that requires you to move, you may have a number of expenses associated with the move. Under limited circumstances, you may be able to deduct costs associated with moving from your federal and/or state tax return at the end of the year. Under Internal Revenue Services rules, a rent deposit is not an allowable moving expense deduction. State laws vary; however, most follow the federal model. In addition, while your employer may reimburse the cost of a rental deposit, employer reimbursements for moving expenses are often required to be included in your taxable income at the end of the year.
Other People Are Reading
Instructions
-
Federal Taxes
-
1
Evaluate the three tests required in order to claim moving expense deductions. Although there are exceptions, the three tests apply in most situations. Your move must be closely related in time -- generally within one year of reporting to work -- to a new job. Next, your new job must be at least 50 miles farther away from your residence than your old job was. Finally, you must work full time in the area of your new residence for at least 39 weeks during the 12-month period after the move.
-
2
Gather your allowable deductions from your move. Allowable deductions include the cost of moving your household goods and personal items as well as the cost of traveling. Traveling costs include lodging, but not meals.
-
-
3
Transfer your costs onto IRS Form 3903 -- Moving Expenses. List transportation costs on line 1 and traveling costs on line 2. Add lines 1 and 2 and enter the result on line 3.
-
4
Enter any amount reimbursed by your employer that was not reported on your W-2 on line 4. For example, if your employer reimbursed you for a rental deposit and the reimbursement was not included as wages on your W-2, then it will be reported on line 4 of Form 3903.
-
5
Deduct line 4 from line 3. The remaining amount reflects your allowable moving expense deduction for your federal income tax return.
State Taxes
-
6
Locate the appropriate state tax authorities. If you are moving from one state to another, check the rules for both states. Tax authorities can be located through the Federation of Tax Administrators website (see Resources).
-
7
Contact the tax authority in the relevant state, or states, to inquire whether moving expenses are deductible for state tax purposes. You may be able to find the information on the authority's website; however, a call or in-person visit may be more productive.
-
8
Request the appropriate form or schedule if moving expenses are deductible. Forms can often be requested or downloaded online by contacting the agency via telephone or by picking up the form in person.
-
9
Complete the form and include your rental deposit in the appropriate section of the form if allowable.
-
1
Tips & Warnings
Retirees or survivors who were working abroad may be able to deduct moving expenses without meeting all the tests generally required for moving expense deductions.
For federal income tax purposes, most expenses reimbursed to you by your employer for moving must be included as income on your W-2 at the end of the year.
