Are Moving Expenses Tax Deductible?

With the recent graduation of the class of 2018, many college grads will be migrating towards the sky-high opportunities that exist here in the city. Many of their moving expenses will indeed be tax deductible. However, there are three distinct parameters that must be passed in order for moving expenses to be considered tax deductible. Read on to learn if your move is eligible for a tax break.

What Does the IRS Say?

According to the IRS, “If you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses but not any expenses for meals. You can deduct your moving expenses if you meet all three of the following requirements:

  • Your move closely relates to the start of work
  • You meet the distance test
  • You meet the time test”

So what are the specific parameters for passing these requirements? Let’s break it down.

Move Related to Start of Work

According to the IRS website, “Your move must closely relate both in time and in place to the start of work at your new location. You can consider moving expenses incurred within one year from the date you first reported to work at the new location as closely related in time to the start of work. A move generally relates closely in place if the distance from your new home to the new job location isn’t more than the distance from your former home to the new job location.”

This basically means that the move must be within a year of obtaining the new job or employment. This gives people some time to consider their new living location without having to worry about an impossible moving deadline.

The Distance Test

The IRS states “Your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home.” This means that if your old job was five miles from your old home, your new job must be fifty-five miles from your old home. Unfortunately, if you already had a long commute to your old job, your new job must exceed that by fifty miles for you to be eligible. However, if you had no previous workplace, the new job must be fifty miles or more from your old home.

The Time Test

In order for moving expenses to be deductible, the IRS stipulates that the tax filer must have worked at the new job for almost a full year. According to the IRS, you must meet the following criteria to pass the time test:

“If you’re an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. If you’re self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location.”

Basically, if you’re self employed, you must work for essentially two years in your new area for the expense to be deductible.

Other Considerations

If you’ve passed all of these criteria for your move, or plan on passing them, you have a pretty good chance of being eligible for the tax deduction. There are exceptions to some rules under cases of death, disability, involuntary separation, or other serious matters. If you’re a member of the Armed Forces and are moving due to a military order, you do not have to satisfy the distance or time tests. For a comprehensive guide on moving expenses, click here.

Spending Moving Expenses on the Right People

Even though many people will be able to deduct their moving expenses for work, it is equally as important to choose the right movers so that your money is well-spent and you arrive in your new location in a positive, ready-to-work manner. Metropolis Moving has a reputation of being one of New York City’s most reliable and friendly professional moving services. Get a quote today to see how reasonable it is to have top-notch professional movers at your service.

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