Tax Benefits and Savings of Relocating May Outweigh Cons

When you are relocating due to changing jobs, the move itself can seem overwhelming and expensive.  There may be some pros amid all of the cons, from a tax perspective though.  If your move meets the following two requirements, some of the burden from the costs of moving may result in tax deductions and help reduce your tax liability when it comes time to file your federal tax return.

  1. The distance between your new job and former house must be at least 50 miles greater than the distance between your old job and former house.
  2. You must work full-time at least 39 weeks during the first 12 months after arrival at new job location. If self-employed, you must work at least 78 weeks during the first 24 months. You do not have to work for the same employer for all 39 weeks, and you do not have to work 39 weeks in a row. If you later fail to meet the time test, you must amend your return to remove the deduction or include previous deduction as other income on your next tax return.

Once you have identified your move qualifies for tax deduction purposes, it’s important to know what costs are deductible and more importantly, track them.

Deductible moving expenses include the cost of moving household goods and personal effects as well as the travel costs for one trip by the taxpayer and each household member.  Some of the more commonly deducted moving expenses are:

  • Lodging expenses while traveling (meals are not deductible).
  • If using a personal vehicle to move, the taxpayer can deduct either the actual out-of-pocket costs for gas and oil or use the standard mileage rate (23 cents per mile during 2015).
  • Parking fees and tolls while traveling.
  • Storage and insurance expenses of personal effects as long as the items are stored no longer than 30 consecutive days after removed from your former home.

Keep in mind that many employers reimburse employees who change locations. If you are reimbursed by your employer, only the excess expenses can be deducted on your federal tax return. If you and your family will be moving in the near future, keep these tax deductions in mind and contact your Anders advisor as we will help maximize your tax savings.