The Average Moving Expense Deduction

If you relocate to start a new job or to begin working for your employer, but in a new location, you may be eligible to claim a deduction on your federal income tax return for the moving expenses you incur. Since the amount of all moving expense deductions depends on each taxpayer's specific circumstances, the average deduction other taxpayers claim may not reflect the amount of your own deduction.

Distance

The first of the two IRS tests you must satisfy to claim the deduction is the distance test. This requires that your new job be at least 50 miles further from your former home than your previous job was. For example, if prior to moving you drove 20 miles each day to your old job, then to satisfy the distance test, the commute from your old home to your new job location must be at least 70 miles. In satisfying the requirements of this test, it is important that your new home be your principal residence.

Time

Beginning on the day you arrive in your new home, the IRS requires you complete 39 weeks of full-time work over the next 12 months. This allows you to deduct your moving expenses even when you haven't secured new employment before moving. It is perfectly acceptable to start your job search after moving as long as you can satisfy the 39-week requirement. There is flexibility in the way you satisfy the 39-week requirement. The 39 weeks need not be consecutive nor must it be for the same employer. Determining whether you work full-time does not have any specific requirements. The IRS will defer to the designation your employer provides and will not require 40 hours per week if it is not standard for the industry you work in.

Deductible Moving Expenses

If you satisfy both tests, there are a number of moving expenses you can include in your deduction. Any cost you incur to transport yourself, your family and your personal effects can increase your deduction. Also included is the cost of storing your personal effects for up to 30 days. When you drive a long distance to your new home and it's necessary to stop overnight and stay in a hotel, you can include your lodging charges. However, you can never include meal expenses in your deduction. The amount of your deduction is generally larger if you own many personal effects and relocate with your entire family than if you pack up a studio apartment and relocate by yourself.

Claiming the Deduction

When you fill out your tax return for the year you intend on claiming the moving expense deduction, you need to complete IRS Form 3903 and include it with your tax return. Since you can claim the deduction in the year you move even if it's impossible to satisfy the time requirement until some point during the next tax year, you must reverse the deduction in the next year if you fail to satisfy the test. You can do this by amending your tax return or by increasing your taxable income in the second year by the amount of your moving deduction in the prior year.

References

• IRS: Publication 521 - Moving Expenses
• IRS: Form 3903