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How to Deduct Moving Expenses

deduct moving expenses when moving a home

Everyone is looking for a cheaper way to relocate. You can save money on transport, packing and many other relocation items. However, if you learn how to deduct moving expenses from your move, you’ll actually get money back after your relocation. Deducting some expenses fro your relocation will definitely help your relocation budget! So, before you start to prepare your moving budget, make sure you check this out!

What makes you eligible for a deduction?

There are many factors which will help you to deduct moving expenses from your relocation. However, there are some requisitions you must meet in order to be eligible for tax deductions. First of all, you’ll need to relocate for work. Even though there are some residential relocations which are eligible for tax deduction, most of the deductible moving expenses are tied to a business relocation. Apart from this, you’ll need to meet the:

  • relocation tied to a job – for the best chance to get your money back from your relocation, you’ll need to move for work.
  • distance test – the distance between your new job and home needs to be at least 50 miles longer than your old job. This will enable you to deduct moving expenses once you relocate. Keep in mind that the IRS evaluates the distance by the shortest route available.
  • time test – this test was meant to ensure you don’t switch ten jobs in a year and move around the country deducting all of your travel expenses. To pass the test you’ll need to work full-time for at least 39 weeks in the twelve month period after your move. You can meet these requirements with more than one employer.
  • special considerations – If you’re self-employed, you must work at least 39 weeks in the first year and at least 78 months in the first two years. Apart from this, there are some relocations which are always eligible for a moving tax deduction.

If you’re in the military and you need to relocate for work, you won’t need to pass the time or distance test. All military personnel can deduct their entire relocation from the moment they step foot into their new home!

A soldier saluting the flag of America can deduct moving expenses without meeting the tests.
All military personnel moving inside the country will get a tax deduction without meeting the tests.

How to claim the deduction?

The biggest problem with tax deductions is that you’re usually only able to claim them a couple of years after the actual reason for deduction happened. Luckily, this is not the case when you claim your moving expenses. In this case, you can claim your deduction even if you don’t know you qualify. Of course, if you don’t end up qualifying, you’ll need to remove the request for the tax deduction. But, if you pass the time and the distance tests, you’ll get a good part of your moving expenses back. In order to deduct your moving expenses, you’ll need to report all your relocation expenses by filling out Form 3903 with the IRS. Once you’ve done this, you’ll need to attach it to your annual tax return report.

A calculator and a form for deducting moving expenses.
Fill out the right form if you want to deduct moving expenses.

Apart from this, you’ll need to check if you meet all the tests. Even though you can claim your tax deduction before you’re sure you meet all the requirements, it’s still better to make sure. Spend some time preparing for the relocation and planning your tax return.

Which expenses can you deduct?

There are many expenses you can deduct from your move! This is why you need to make sure that you mention all of your expenses in the form. However, make sure all the expenses you claim a deduction for are reasonable and necessary for your relocation. If you can explain why you needed it, you can deduct it from your taxes. Shipping and storage costs are the largest costs connected to your relocation. Make sure you mention these in your tax report. If you need to place your things in a storage unit because you can’t move into your new home right away, you can get a deduction for that too. Deduce up to thirty days of using storage from your taxes.

Apart from them, you can get deductions for travel costs when you move. Mileage and gas are deductible from your taxes. This also goes for boxes and packing materials. You can deduce your packaging from your taxes as well. However, we suggest you find free moving boxes, and make your relocation even cheaper!

Get a reimbursement from your employer

In addition to this, you might need to spend a night or two in a hotel while you’re moving. This is especially common with long-distance moves. You can mention these moving expenses in your tax report. The IRS will reimburse you if you meet the time and distance tests. Finally, you should mention any reimbursement you received from your employer because of the move. Keep in mind that if this reimbursement exceeds your own moving costs, you’ll need to report the excess as a taxable income. However, if your own costs are bigger than what your company is giving you, you can deduct your own expenses from your taxes.

When can’t you deduct moving expenses?

There are certain situations which don’t allow tax deduction. For one, if you’re not moving for work, you’ll have a hard time getting those deductions. Most residential relocations don’t count towards your taxes. Apart from this, you can’t ask to deduct moving expenses for relocating any contraband or illegal materials. So, you should know which items aren’t meant for relocation, and don’t count those towards your taxes. Also, you’ll get no tax deduction for items which you shouldn’t transport. Motor oil, fuel, and abrasive chemicals aren’t supposed to be relocated at all, so please don’t mention them in your tax report.

Deduct moving taxes to save some money.
Save money by deducing your move from your taxes.

The last piece of advice when you deduct moving expenses is that you do it without your movers. This is something between you and the IRS. Your movers will be able to help you a bit, however, be careful with cheap movers, since they can use your tax information to scam you.