The United States Tax Code is complicated — it is filled with odd deductions, exceptions and rules. One deduction that isn’t too complicated is the moving deduction. The moving deduction is one of several tax deductions that seeks to reward people for improving the state of their employment.
The moving deduction allows taxpayers to deduct the cost of moving from their taxes. The purpose of a move must be to start a new job or business, or to keep a job when a business location has changed. You don’t have to move for a better job or a higher paying job; if you move to the beach for retirement and take up a full-time job as a bartender, you may be able to deduct the cost of the move.
In order to deduct the cost of a move, you must pass three tests:
Move Related to Start of Work
Your move must be tied to your start at a new job or business in both distance and time. Moving expenses must be incurred within one year of the day that you start work. The distance between your new home and your new job must be less than the distance from your old home to your new job.
Your move must reduce the commute to your new job by at least 50 miles. That is, your new job location must be at least 50 miles further from your old home than from your new home.
Working Time Test
You must work full-time for at least 39 weeks out of the year that immediately follows your move. If you are self-employed, you also must work at least 78 weeks out of the two years following your move.
Members of the military who are ordered to move do not need to meet the distance or working time tests.
Please contact us today for more information on preparing for your move. This article is not tax advice; please contact your accountant if you need tax advice.