Taxpayers may be able to deduct certain expenses of moving to a new home because they started or changed job locations. Use Form 3903, Moving Expenses, to claim the moving expense deduction when filing a federal tax return.
Definition of “Home”
Home means the taxpayer’s main home. It does not include a seasonal home or other homes owned or kept up by the taxpayer or family members.
Eligible taxpayers can deduct the reasonable expenses of moving household goods and personal effects and of traveling from the former home to the new home. Reasonable expenses may include the cost of lodging while traveling to the new home. The unreimbursed cost of packing, shipping, storing, and insuring household goods in transit may also be deductible.
Who Can Deduct Moving Expenses?
1. The Move Must Closely Relate to the Start of Work
Generally, taxpayers can consider moving expenses within one year of the date they start work at a new job location.
2. The Distance Test
- A new main job location must be at least 50 miles farther from the employee’s former home than the previous job location.
- For example: If the old job was 3 miles from the old home, the new job must be at least 53 miles from the old home.
- A first job must also be at least 50 miles from the employee’s former home.
3. The Time Test
- After the move, the employee must work full-time at the new job for at least 39 weeks in the first year.
- Those who are self-employed must work full-time for at least 78 weeks during the first two years at the new job site.
Note: Different rules may apply for members of the Armed Forces or a retiree or survivor moving to the United States.
Additional Moving Expense Tips from the IRS
Reimbursed Expenses
- If an employer reimburses the employee for the cost of a move, that payment may need to be included as income.
- The employee would report any taxable amount on their tax return in the year of the payment.
Nondeductible Expenses
The following expenses are not deductible:
- Any part of the purchase price of a new home
- The cost of selling a home
- The cost of entering into or breaking a lease
- Meals while in transit
- Car tags and driver’s license costs
Recordkeeping
It is important that taxpayers maintain an accurate record of expenses paid to move. Save items such as:
- Receipts
- Bills
- Canceled checks
- Credit card statements
- Mileage logs
- Statements of reimbursement from their employer
Address Change
After any move, update the address with:
- IRS: File Form 8822, Change of Address
- U.S. Post Office: Notify separately
Frequently Asked Questions
Who qualifies to deduct moving expenses?
To qualify, taxpayers must meet the distance and time tests. The new job must be at least 50 miles farther from the old home than the previous job, and the taxpayer must work full-time for at least 39 weeks in the first year (or 78 weeks within two years if self-employed).
What moving expenses can I deduct?
You can deduct reasonable expenses such as packing, shipping, storing, and insuring household goods, as well as travel and lodging costs related to the move. Meals, home purchase costs, and lease-breaking fees are not deductible.
Are moving expenses reimbursed by my employer taxable?
In many cases, yes. If your employer reimburses your moving costs, the reimbursement may be considered taxable income and must be reported on your tax return unless specific exclusions apply.
How should I document moving expenses for my tax return?
Keep thorough records, including receipts, bills, canceled checks, credit card statements, and mileage logs. Also, retain any statements from your employer about reimbursements and use IRS Form 3903 when filing.
Do I need to update my address with the IRS after moving?
Yes. File Form 8822 with the IRS and notify the U.S. Postal Service separately to ensure your records are updated and any correspondence or refunds are sent to the correct location.