Can I Get a Tax Credit for Moving?

If you relocate for work, you may be able to claim a tax deduction for your moving expenses.

If you receive a job offer in a new city, or simply decide that a change in venue is what you need to improve your career fortunes, the Internal Revenue Service may be willing to lend a financial hand. The guidelines are specific and somewhat stringent, especially for self-employed workers. However, if you meet the requirements, you can claim a tax credit for your move.

Claiming the Moving Expense Tax Credit

To claim the tax credit for moving, complete form 3903. It is essentially a worksheet that helps you determine whether or not you qualify for the tax credit. You do not need to itemize any other deductions to claim the moving tax credit. Approved expenses include actual moving costs, storage fees, insurance, utility connection and disconnection fees, lodging expenses, costs of shipping your car and transport of your pets.

You must meet three tests to qualify: the work-related test, distance test and time test. Once you meet the requirements of those three tests, the form provides the means to calculate how much of a tax credit you can claim. Once you calculate the amount of the credit, enter the figure on form 1040.

Work-Related Test

Your move must be work related to qualify for the tax credit for moving. If you have accepted a job offer and are moving to that job, you fulfill this requirement. However, you do not need to have a job offer in hand. As long as you begin work within a period "closely related in time" to the date of your move to a new area, you fulfill this test. If you are self-employed and you move to improve your prospects for gaining clients and customers, and you gain clients or customers in the new location, you also meet the work-related test.

Distance Test

The distance test requires your new job to be located at least 50 miles farther away from your former home than the distance between your former job and your former home. The purpose of this test is to distinguish a true relocation for work from a move to decrease commuting time. However, this requirement is waived for some members of the armed forces who are on active duty and move because they have been stationed at a different base.

Time Test

If you work for an employer, you must work full time for at least 39 weeks during the 12 months immediately following your move; you do not have to work for the same employer during the entire period, however. If you are self-employed, you must work full time at least 78 weeks during the 24 months immediately following your move. In both cases, the weeks you do not have to be consecutive. You may claim the moving credit immediately after your move. However, if you do not end up meeting the time requirement, you may have to repay the amount of the tax credit on future tax returns.

References

• Bankrate: Let Uncle Sam Help Pay for Your Move; February 2011
• H&R Block: Tax Tips & Calculators; 2010
• Internal Revenue Service: Are You Moving This Summer?; November 2009
• Internal Revenue Service: Publication 521 -- Moving Expenses; December 2010
• Internal Revenue Service: Topic 455 -- Moving Expenses; March 2011

Resources

• Internal Revenue Service: Did You Know That There Are Events in Your Life . . . Impact?; June 2011
• Internal Revenue Service: Form 3903 -- Moving Expenses