How to Deduct Moving Expenses for Business

If you have to relocate for business, you may be able to deduct the moving expenses from your income taxes. There are a couple of tests you can take to determine whether you qualify for such a deduction.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Publication 521
• Form 3903
• Form 1040

1. Determine whether your move meets the "distance test" to qualify the expenses for tax deduction. Your new job must be more than 50 miles farther from your old home than your old job was. For example, if your old job was located 10 miles from your old home, your new job must be located at least 60 miles from your old home to make your moving expenses tax-deductible.

2. Evaluate whether your job situation meets the "time test." Employees have to work at least 39 weeks during the year after the move. Self-employed people have to do the same, but they also have to work a total of 78 weeks during the two years following the move.

3. Keep receipts for all moving expenses you incur including hiring movers, buying packing supplies, transporting your car and transporting your family, for example.

4. Record moving expenses for business on form 3903 (see Resources below). This form also contains a section where you can record your "distance test."

5. Enter your total moving expenses on Line 26 of the Adjusted Gross Income section of your 1040 tax form. The 3903 form should be attached to the 1040 when you file.

Tips & Warnings

• You can deduct the cost of traveling to your new residence, including transportation and accommodations.
• If your business is the military and you're moving because of transfer orders, you may not have to satisfy the time and distance tests to deduct your moving expenses.
• If you are moving to somewhere outside of the United States, you can also deduct the cost for storing some or all of your household goods while you're gone, as well as the cost of moving those goods to storage.
• Meals you have and activities you enjoy while traveling to your new home are not tax-deductible.
• Moving expenses that are reimbursed by your employer are not tax-deductible.
• Costs associated with setting up a new life and home in an different city, such as mortgage-closing costs, utility-setup fees and similar expenses, are not classified as moving expenses.

Resources

• Publication 521 from the IRS
• Form 3903 from the IRS
• Form 1040 from the IRS