Moving can be expensive, especially if you're moving out of the state, but for some people, the IRS might be able to help.
Is Your Move Tax Deductible?It depends. The short answer is that if you aren't moving for a job, no, you can't deduct it. However, if you are moving for a job and you're moving a good distance away (and when people are moving out of state, they often are), you might be able to claim the move on this year's taxes.
The IRS allows tax deductions if your move meets three criteria:
- It has to be job related
- It has to pass a distance test
- There's also a timing test
Job RelatedThe job related test is actually quite easy. It doesn't have to be a job transfer for your move to be tax deductible. It simply has to be a job. You even qualify if you are leaving an old job for the new job.
DistanceThe distance test is less easy.
The location of your new job must be at least 50 miles farther from your previous residence than your last workplace was. That means if you lived 10 miles from your old job, your new job must be at least 60 miles from your old home before you can deduct moving costs. The distance test doesn’t take into account your new home’s location.
The IRS says you figure the distance using the shortest of the more commonly traveled routes. That means don’t take the scenic route to make sure you meet the mileage measurement.
TimingThe timing test is also quite easy. You can deduct your move (assuming the above criteria is met) as long as you move sometime within a year of starting your job. So, if you're leaving your family behind while getting settled, make sure you move them within your first year.
You must also work in your new location at least 39 of the 52 weeks after you arrive. The good news is that if you arrive at your new job and realize it's not for you, you're free to take another job and have it count toward the 39 weeks.
If you're self-employed, you will need to work 78 weeks in the two years after you move.
What Can You Deduct?
IRS-approved deductions include the costs to move household goods and personal property, limited storage and insurance fees, and utility connection or disconnection charges.You can even deduct the cost of moving pets.
Some lodging and travel expenses near your new and former homes also are deductible, as are shipping costs for your car. If you drove your car yourself, the standard mileage rate for using your vehicle to move in 2016 was 19 cents per mile. In 2017, the rate drops to 17 cents a mile.
Naturally, don't just take our word for it. Check with your tax professional before the move and when filing your taxes to find out if your move is tax deductible and to get the maximum deduction.
Featured image via Pictures of Money/Flickr.