A Quick Guide to Deducting Moving Expenses

February 19, 2021

It’s possible to deduct moving expenses from your income taxes if the relocation was work-related. The move must also pass the IRS’s “distance and time tests” to qualify. If you moved within the past year for work, review what your accountant service in Los Angeles wants you to know about potential deductions. 

Qualifications

To deduct moving expenses from your taxes, your move must meet one or more of the following qualifications: 

Closely Related in Time: the move occurred within one year from the date you started your new job. If you did not move within the designated time frame, the IRS might make an exception if you have a valid excuse. For example, if you planned to move within the correct time frame but had to care for an ailing relative unexpectedly, deducting relocation expenses may be possible. 

Distance: The move must be exclusively for a job in a new location at least 50 miles further than your former job was from your old house. For example, if you used to live 10 miles from your old home, the new job must be at least 60 miles away from that residence. 

Time: You must work full time at your new job for at least 39 weeks at the new location. This employment duration must take place within 12 months of the move. If you are self-employed, the time test still applies. 

Time test waivers include disability, military commitments, death of a loved one, job transfers for employer advantages, and layoffs for reasons other than purposeful misconduct. Military personnel cannot claim moving expenses reimbursed by the federal government; however, they can claim any related expenses that are not covered. They have one year to claim such expenses, which must be “reasonable” and fall into categories such as costs of transporting personal belongings. 

Required Information & Expenses That Don’t Qualify 

The IRS requires taxpayers to furnish the “types and amounts” of moving expenses, as well as the amount of any moving-related reimbursements listed on Form W-2. Moving expenses that do not qualify for tax deductions include lease expenses, security deposits, storage unit charges, automobile registrations in new states, and costs associated with buying and selling a home. Other non-deductible expenses include gas and tolls from taking longer routes to reach the new destination. 
For tax prep assistance this year, contact the Encino tax consultants at Wallace & Associates. The Los Angeles accounting firm provides a full suite of tax services.