Moving is not something I nor most others even remotely enjoy. If you want to work, it is a fact of life these days. Fortunately, you can make that move and claim tax deductions if you meet a couple simple tests.
When one thinks of moving, it is usually to cringe. After getting your taxes done, it comes in close to going to the dentist on least favourable things to do. That being said, it is more and more of a necessity these days.
The simple fact is the old world days of working for one company in one town for thirty or forty years are long gone. Everyone changes jobs these days. In many cases, the optimal job you are looking for is often in another location.
As surprising as it may sound, the IRS has actually acknowledged this societal change. The agency and Congress have actually moved to create tax deductions related to such moves. Well, at least some facets of them.
So, can you just claim deductions for your moving expenses? Of course not. We are talking about taxes, which means you have to pass tests. The first is you new job must be 50 miles further from your home than your last job. Huh?
A practical example will work. Assume my last job was 7 miles from my home. My new one is 67. I have passed the test. If the new one was only 27 miles, I could not. Yes, it is a strange test, but it is par for the course when talking about the IRS and taxes.
One test is never enough with the IRS. There is another test that requires you to work roughly ten months out of the twelve full time after the move before you can claim the deduction. The exact requirement is thirty-nine weeks in the 12 months.
Oddly, the IRS also allows deductions to be claimed by the self-employed if you meet the above requirements. The time test is expanded, however, in that you have to work 78 weeks in the first 96 weeks.
Importantly, not all moves qualify for the deduction. The fact you moved down the block and happened to switch jobs at the same time is not going to cut it. The IRS is sensitive to abuse of these deductions, so don’t be too aggressive in claiming them.
So, what is deductible assuming you meet the tests? Well, the reasonable moving expenses you incur. These include the costs of moving household items and your personal effects as well as travelling expenses including lodging.