Moving for a new job can be expensive. The good news is that if you are itemizing deductions for years 2017 and earlier, you can deduct some of the expenses on your tax return.
However, if you moved in year 2018 or later, the Tax Cuts and Jobs Act eliminated miscellaneous itemized deductions. This includes moving expenses. If you are filing for years 2017 and prior, here are the requirements for taking the deduction.
Tax Year 2017 and older
In order to deduct your moving expenses, you must be able to meet all three of these requirements:
- The IRS wants your move to be closely related to the start of work both in time and in place. In other words, you must move within a year from the day you first start work in the new place. However, you don’t need to set up work before moving. In order to satisfy that your move is closely related in place, you must be able to show that the distance from your new home to your new job is not more than the distance from your former home to the new job.
- You must meet the distance test. Your new job location must be at least 50 miles farther from your old home than your old job was from your former home.
- You must meet the time test. There are different time tests for employees and self-employed taxpayers. An employee must work full time for 39 weeks during the first 12 months after arrival. The self-employed taxpayer must work 78 weeks during the first 24 months of arrival.
If you can meet these conditions you can deduct several moving expenses, including the cost of moving your household goods and personal effects, ordinary travel expenses including lodging, the costs of connecting and disconnecting utilities, costs of shipping your car and household pets, and the cost of storing and insuring household goods.
Tax Year 2018 and newer
Active duty military are still eligible to deduct some of their moving expenses. Read this article for more information.