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FINANCIAL SIDE OF MOVING
-> Tax deductionsMar 14, 23:04
Question by kate (Kate)
Deducting moving expenses from personal taxes
I am moving from New York to L.A., and I heard there are tax deductions for moving expenses.
How do I deduct those moving expenses from my taxes?
Mar 17, 11:05
Answer by julie (Julie Owens)
To give you an answer that covers all possible cases I will place a series of citations from our Moving Guide regarding the moving related tax deductions, with my comments.
(Those regulations might change in the future and we will be monitoring and updating them here).
Here is what it say:
Some of your moving expenses may qualify for deduction as an adjustment to income.
It can be done in case you move coincides closely with the start of a new job or a job transfer.
Does your move coincide with the start of a new job or a transfer? It can be done in case you move coincides closely with the start of a new job or a job transfer.
If not then you probably won't be able to deduct your moving expenses. However I will assume it does since you are moving across country.
Generally, deductible expenses are:
Since you are moving locally I presume all three can apply to your case, unless you get a free storage from a moving company for 30 days (a quite typical arrangement) and plan to fly to your new home instead of driving.
- Required lodging (but not meals) on a way to your new home.
- Cost of moving household goods and personal belongings.
- Storage of your household goods (up to 30 days).
In order to deduct your moving expenses, you have to meet two tests:
Time test:
You must begin working as a full-time employee within 13 weeks of your move, and you must work at least 39 weeks during the 12 months after your move. And it doesn't matter whether you were transferred by your employer or you took a brand new job.
Distance:
To meet this test, your new job has to be at least 50 miles further from your old home than your old job was. If you didn't have a job before the move, your new job has to be at least 50 miles from your old home.
Time test means that you must find a job within the 3 months after you move to the new location, and keep being employed for 9 month during the year following the move.
Time test:
You must begin working as a full-time employee within 13 weeks of your move, and you must work at least 39 weeks during the 12 months after your move. And it doesn't matter whether you were transferred by your employer or you took a brand new job.
Distance:
To meet this test, your new job has to be at least 50 miles further from your old home than your old job was. If you didn't have a job before the move, your new job has to be at least 50 miles from your old home.
Distance test means that if your old job was 20 miles from your old home then your new job has to be at least 70 miles form your old home. In your case I belive its thousands of miles, so you certaintly pass that test.
Other important criteria that must be met are:
1) Your move has to make your commute shorter than it was prior to your move.
In other words, the IRS won't allow you to deduct your move if you move further away. It could pose a problem for you since the distances in L.A. are much bigger than in New York.
1) Your move has to make your commute shorter than it was prior to your move.
2) Your move must be closely related to the start of your new job. Generally, this means you have to incur and pay your moving expenses within a year of starting the job, unless circumstances prevented you from moving earlier.
Bottom line - if you found a new job you have one year to actually move, unless you have a very good excuse.
3) For most taxpayers, expenses are deductible in the year they were paid, regardless of when they were incurred.
This one is self explanatory.
4) You cannot deduct a reimbursed expense, unless the reimbursement has been counted in your wages.
Bottom line - if you didn't pay it you can't claim it.
5) If you are self-employed in the new location, you must work at least 78 weeks during the first 24 months.
Self employed? Then you can only be idle for 6 month during the following 2 years. I suppose this requirement can be monitored during the audits that IRS would run on a self-employed business.
6) If you are married and are filing a joint return, only one spouse must meet the time test. You cannot, however, add the weeks your spouse worked to those you worked to satisfy the test.
Just pick the one who worked the most.
7) In general, you do not have to meet the time test if:
The IRS will give you an easy time on the time test if some of the things happening are beyond your control.
- You are in the armed forces on active duty and your move was due to a permanent change of station, or
- Your job at the new location ends because of death, disability, a transfer for your employer's benefit, or a layoff other than for willful misconduct; or
- You moved from outside of the United States to the United States because you retired, or you are the surviving spouse or dependent of a person who died while living and working outside the United States, and your move begins within 6 months of that person's death.
I hope that answers your question!
Good luck with your move,
Julie Owens @ MovingAnswers.org
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