Moving Expense Guidelines
The current tax regulations regarding moving
expenses are as follows (refer to
IRS Publication 521
for specific details on taxable and non-taxable moving expense):
Tests for Tax Deductibility:
Two conditions must be met before job related moving expenses could be
considered non-taxable.
1.
Distance Test - The new workplace must be at least 50 miles farther from
the employee’s old residence that the previous workplace was (e.g., if the
employee’s old job was 10 miles from his old residence, the new job must be at
least 60 miles from the old residence). If there was no previous workplace, the
new workplace must be at least 50 miles from the employee’s old residence. The
shortest driving distance between the two points is the rule of measurement.
2.
Time Test - During the 12-month period immediately following the move,
the employee must work full time for at least 39 weeks in the general location
of the new workplace. This requirement does not apply if the employee cannot
meet it because of death, disability, involuntary termination of employment
(except for willful misconduct), or transfer for the employer’s benefit.
The move must also be closely related in time to the start of your new job,
usually within one year.
Deductible Moving Expenses:
There are only two types of deductible moving
expenses:
- Transportation and in-transit storage of
household goods and personal effects.
Transportation of household goods. All reasonable expenses incurred in the
packing and moving household goods and personal effects to the new residence
and storing and insuring them while in transit are deductible.
Storage costs constitute “in-transit” expenses
if they are incurred within 30 days after the goods and effects are moved from
the old residence and before delivery to the new residence. The employer can
reimburse the employee for the expenses or pay the moving company directly.
- Expenses of traveling from the old residence
to the new residence, with the exception of meals, which are not deductible.
All reasonable expenses incurred while traveling from the employee’s old home
to the new home, such as transportation and lodging during the trip, are
deductible.
NOTE: REASONABLE EXPENSES ONLY! The most direct
route and lodging must not be “lavish or extravagant”.
Non-deductible Moving Expenses (Previously
were deductible):
-
Pre-move house hunting expenses.
-
Temporary living expenses after starting in the
new location.
-
Real estate expenses.
-
Cost of meals while traveling from the old home to
the new home.
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