DIVERSIFIED TAX TIDBITS by Mark A. Burns
The end of the school year is approaching, and many families will be moving into new homes for various reasons, including corporate relocations. At this time of the year I am often asked the question, “Will my moving expenses be tax deductible?” So this column will address these tax rules.
There are two basic requirements that must be satisfied for moving expenses to be tax deductible:
- The move must be related to starting work at a new job location.
- Distance test – The distance from your old home to your new place of employment must be at least 50 miles greater than the distance between your old home and your former place of employment.
To satisfy No.1 above, there does not necessarily have to be a direct “cause and effect” relationship between the move and a change in jobs. Even if your decision to move is primarily based on other factors, such as planning for retirement, better weather, getting closer to family, etc., it is still possible to deduct the moving expenses on your tax return if you satisfy certain criteria as discussed in the next paragraph. But this situation is rare, and I think I have had only one example of this in my many years of preparing tax returns.
Ignoring the primary reason for your move, if you incur moving expenses within one year of starting work in a new job location (assuming you meet the 50-mile distance test) and as long as you work full time for at least 39 weeks in the first 12 months at the new job location, then you qualify. If you are self-employed, then in addition to the 39-week test, you must work full time at least 78 weeks in the first 24 months. “Full time” is not specifically quantified but is determined by what is normal for your type of work in your area.
If your moving expenses are tax deductible, then exactly what expenses can you deduct? Only the direct costs of moving your family members, household furnishings and personal effects from your old home to your new home are allowed. These include packing costs, the moving van, family travel (including lodging if necessary), mileage at 19 cents per mile (2016 rate) to move your cars, temporary storage of furniture as part of the move, the cost to transport pets, etc. Certain expenses that used to be tax deductible, including house-hunting trips, temporary living expenses, etc., are no longer allowed. Also, inexplicably, meals during the move are not allowed as a tax deduction.
Obviously if your employer pays for or reimburses you for any moving costs, then you cannot deduct those expenses since you are not out of pocket for those expenses.
Each person’s particular situation can be unique. Always consult a tax professional if you are uncertain about how tax matters might affect you.
Mark A. Burns, M.B.A., is a C.P.A. with Diversified Financial Solutions PC in Southbury. He can be reached at 203-264-3131 or Mark@DFSPC.biz.
