Tax
Tips: Deducting Moving Expenses
If you moved in 2001, chances are you're ecstatic that
the hassle of moving is finally over. But don't put it too far out of your mind - if you
or your spouse got a new job or transferred to a new work location, you might be able to
deduct your moving expenses from your taxable income.
The U.S. Census Bureau reports that about 16 percent of all relocations in 2000 were
work-related - a new job in a new community or state, or a move to ease a stressful
commute.
Before you start counting the dollars you might save, you
must first pass the IRS' moving deduction test.
In order to qualify, there are two major criteria you must meet - the move must be
close to the time you begin work and your new home must be closer to your place of
employment than your former home and workplace.
The IRS says you can generally consider moving expenses incurred within one year from
the date you begin work at the new location. It doesn't matter if you get the new job
before or after you move.
In order to pass the distance test, your new job location must be at least 50 miles
farther from your former home than your old main job location was from your former home.
For example, if your old workplace was 10 miles from your old house, your new place of
employment must be at least 60 miles from the former home.
And when it comes to the time test, if you are an employee you must work full-time for
at least 39 weeks during the first 12 months after you arrive in the region of your new
job location.
It's a bit tougher if you're self-employed - you must work full time for at least 39
weeks during the first 12 months and for at least 78 weeks during the first 24 months
after you arrive. If you're married, you can use you or your spouse in determining the
number of weeks worked, but you can't combine weeks.
Of course, there are exceptions. For example, if you're a member of the Armed Forces on
active duty and you move because of a permanent change of station, you don't have to meet
the time and distance tests.
So, if you've passed the tests, what can you deduct?
The cost of packing, crating, and transporting your household goods.
- Storage and insurance costs related to goods and personal effects within any 30-day
period after your things are moved from your old home and before they are delivered to
your new place.
- The cost of connecting and disconnecting utilities.
- The amount you pay to ship your vehicle and your pets to the new house.
- Lodging expenses your family incurs during the move period. Meals are not deductible.
- Traveling to your new home. If you travel by car, you can deduct the standard mileage
rate of 12 cents a mile or deduct the actual expenses of gas and oil, parking fees and
tolls. You can't deduct general repairs, maintenance, insurance or depreciation of your
car's value.
And the IRS lists a whole slew of things that can't be deducted -
everything from the purchase price of your new home to your driver's license to refitting
of carpets and draperies.
One thing to keep in mind is that you can't double-dip by taking a moving expense
deduction and a business expense deduction for the same expenses. You'll want to take a
look at the IRS' publication 463, Travel, Entertainment, Gift, and Car Expenses to
determine which deduction is more advantageous.
You also can't deduct any moving expenses that were reimbursed by your employer.
Moving expenses are figured on Form 3903 and deducted as an adjustment to income on
Form 1040.
