This year one of my clients had to move to a different city because he got a job offer, he could not resist. After excitement from landing a dream job went a way, reality of moving his household settled in. My client, let’s call him John Doe is a single taxpayer without any dependents, so he packed his suitcase, started his car and drove for a couple of days from city A to city B. New employer reimbursed him $300 for the moving expenses. Let’s just pretend transportation of his expenses cost him $100 and hotel $500. Total move was $600, of which $300 was reimbursed by the employer and reported on W2 box 12. Mr. Doe can deduct $300 on line 26 of Form 1040. This is above the line tax deduction, which will make his taxable income $300 less. If there was no reimbursement from employer, the whole moving expense amount is deductible, i.e. $600 in this example; and of course if employer reimburse him in full for the moving expenses, Mr. Doe cannot claim this deduction.
In order to see how much is deductible, one needs to fill out form 3903 (click here to see a short video that shows how to do it) and then transfer final number from form 3903 to line 26 on form 1040.
So, did you move this year? Want to see if you can benefit from this deduction? Follow steps in the video.
But before you even start filing out form 3903 you need to satisfy a few tests:
- Your move need to be close to the start of new job. You move has to be within one year from the date you started your job.
- Distance from your NEW home to a new job has to be NOT longer then from FORMER home to a new job.
- 50 miles rule. If you had 10 miles distance from your old home to your old job, your new job must be 60 miles or more from your old home. If you did not work before, your job needs to be at least 50 miles from your old home.
- Time test. For employees: you have to be employed full time for at least 39 weeks in the 12 months period following start of your new job. For self-employed: 39 week in the first 12 months and for a total of 78 weeks in the first 24 months
And, if you want to claim this deduction, please keep all your receipts. By the way, your meals during move are not deductible.