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What Moving Expenses the IRS Lets You Deduct

Moving is expensive, but someone wants to help: Uncle Sam. Yup, that's right and here's how:

The Internal Revenue Service provides relatively generous tax deductions for your moving expenses as long as your move qualifies under certain IRS criteria.

In order for your relocation costs to be tax deductible, your move must be related to your job or employment. Additionally, the move must be of a certain distance from your previous residence and you must remain in your new job for a certain amount of time. If you pass these tests, you will be eligible to write off your moving expenses.

The Distance Test:

The most important criteria for determining if your move is going to qualify for moving expense deductions is the 50 mile test: Your new place of employment must be at least 50 miles farther from your old home than your old job location was from your old home. For example, if you previously lived 20 miles from your old job, your new job must be at least 70 miles from your previous residence to qualify.

The Time Test:

The IRS wants to ensure your move is work-related. Your first test is that you must start your new job within 12 months after your move. The second test is that you must maintain full time employment with your new employer for at least 39 weeks within the first 12 months after your move. You do not need to work at the same employer for all 39 weeks to qualify and the time period does not have to be consecutive employment.

If you are self-employed, the time test extends to 78 weeks at your new place of self-employment within the first 24 months after your move. Again, you must start your self-employment within 12 months of your move.

How to Deduct your Moving Expenses:

To deduct your moving expenses, keep detailed receipts of your IRS approved deductions, which include the amount you spend to move your household possessions (whether with a professional moving company or the costs of a self service move), storage costs, insurance fees, utility connections and disconnections, auto transport costs and certain travel and lodging expenses associated with your move. It is best to review IRS Publication 521, Moving Expenses for a complete list of what you can deduct related to your move.

If you are married and filing a joint return, only one person needs to meet both the time and distance tests to qualify for the moving expense deduction. However, you cannot combine employment periods to meet the time worked test.

Although you may incur significant costs associated with your relocation, the moving expense deduction can help take some of the sting out come tax time. As always, you should consult with your tax professional to make the best decisions related to your individual situation.

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You Can Deduct Your Job-Hunting Expenses Too

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A Moving Company's Moving Story
June, 2012

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