So, let’s say you get a new job. Great pay, great benefits, and it’s in a great new city miles away from where you are now.
While moving expenses can quickly add up, the good news is that you can deduct some of those expenses if your move is related to beginning employment at a new principle place of work.
You are able to deduct the “reasonable expenses of moving your household goods and personal effects” to your new home. You can also deduct a certain amount for travel. Taking advantage of these possible deductions means being familiar with Form 3903.
First things first: a few tests to see if you qualify. As long as you are moving to a new home because of a new principle place of work, it doesn’t matter whether you are an employee of self-employed. However, you must meet both the distance and time tests in order to qualify for the deduction.
In order to pass the distance test, your new place of work must be at least 50 miles farther from your home than your current place of work. In other words, if your current work location is 12 miles from your current home, your new work location must be at least 62 miles from your current home.
If you don’t have a current place of work—because you are coming off of a period of unemployment, returning from a period of staying home to care for your family, or any other reason—your new work location must be at least 50 miles from your current home. To calculate this distance, find the shortest distance among the routes commonly traveled between the two places.
To pass the time test, you must work at the new location for at least 39 weeks out of the twelve months following the move. If you are self-employed, you must work in the general area of your move for 39 weeks of the first year, and 78 weeks out of the first two years.
If you will not meet the minimums of the time test by the time your return is due, you may still claim the deduction, provided you expect to have worked the minimum number of weeks within your first year at the new location.
Later, if you do not meet the time test, you must either amend your return, or report as income the amount you previously deducted. In other words, if you claim the deduction for $500 in expenses and then unexpectedly lose your job, you may amend your previous return, or you may report an extra $500 in a subsequent return.
There are exceptions to the time test. You needn’t meet this test if any of the following apply:
- Your job is ended due to disability
- You are transferred for your employer’s benefit
- You are laid off or discharged for a reason other than willful misconduct
- You are in the Armed Forces, and the move is due to a permanent change of duty station
- You meet certain requirements for retirees living outside the United States
- You are filling out the form for someone who has passed away
Now that we’ve settled all that, filling out the form is easy. Just make sure you keep all of your receipts for any costs related to packing, crating, insuring, moving or storing your things.
You’ll enter that total on line 1. This number includes anything paid to move things to or from storage.
Next, add up all the money spent on traveling and lodging on the way to the new location. (Leave out any sightseeing trips along the way.) Members of your household don’t need to go together, but you can only deduct one trip per person.
If you use your own vehicle, you may deduct actual out-of-pocket expenses on gas and oil, or deduct 16.5 cents per mile traveled. You may also add tolls to the amount deducted. Total those two numbers, and you’re done!
Published or updated April 4, 2013.