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 If you moved because of a change in your job location or because you started a new job, you may be able to deduct your moving expenses if your move is closely related to the start of work. To qualify for the moving expense deduction, you must meet both the distance and the time tests, unless you are a member of the armed forces and your move was due to a permanent change of station.
IRS – Tax deductions that may be taken for moving
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Frequently Asked Questions:
Q: I have two moves in one year. How is this handled?
A: You must complete a separate Form 3903 for each move. Your employer should provide a separate accounting of expenses for each move.
Q: My employer doesn’t pay for storage of household goods. Can I deduct these costs?
A: The cost of in-transit storage of household goods and personal effects is deductible up to 30 consecutive days for domestic moves.
Q: How is it handled if my employer does not calculate tax gross-up on certain moving expenses?
A: Your employer should withhold a sufficient amount from your reimbursement check to cover Federal, State, and Social Security Taxes, Medicare, and local taxes.
Q: Can I still deduct moving expenses if I don’t prepare an itemized Federal Tax Return?
A: You don’t need to itemize to deduct moving expenses. Your employer will exclude qualified reimbursements from your W-2 wages. Any other tax deductible expenses you had that were not reimbursed can still be deducted. Use IRS Form 3903 to take applicable deductions.
Q: What forms do I use if I move from the US to another country?
A: “Tax Guide for U.S. Citizens and Resident Aliens Abroad” explains how to calculate your moving expenses if you are making use of the foreign earned income exclusion. Tax Form 3903 is used to deduct relocation expenses.
Q: Will I lose some of the value of my itemized deductions and personal exemptions due to my higher adjusted gross income when I complete my tax return?
A: This depends upon the level of income and if your employer’s gross-up policy considers that phase-out of itemized deductions and exemptions. You’ll need to discuss this with payroll or HR for more details.
Q: How is it handled if my employer provides a lump-sum to cover my relocation expenses?
A: Lump-sum payments are considered income and are included in your wages. If your lump-sum payment included qualified moving expenses, don’t forget to deduct your actual, receipted costs when you complete IRS Form 3903.
Q: Can I deduct the cost of travel for my child who attends college in another state?
A: Moving expenses that you pay for yourself and members of your household can be deducted. A member of your household is anyone who has both your former and new home as their home.
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