Moving Expenses

Taxpayers that moved to start a new job, or to seek work in a new city, may be able to deduct the cost of moving expenses from their income. The deduction is designed to benefit workers who were effectively forced to relocate due to employment demands. Not all moving expenses, however, are deductible. Taxpayers may deduct (1) reasonable costs for packing and shipping of household goods and personal property as well as (2) costs for travel and lodging. Meals consumed while traveling, on the other hand, are not eligible for this deduction.
To qualify for this deduction, a taxpayer must meet both distance and time tests1:

Distance Test: The distance between the worker’s new job and old home must be at least 50 miles farther than the distance between the old job and old home. For example, Jen commuted 25 miles from her old house to her old job prior to relocating. After the move, she found a new job that is located 80 miles from her old house. Because the difference (55 miles) is greater than 50 miles, Jen passes the distance test.
Time Test: A worker must work “full-time,” or at least 39 weeks, during the 12 months following the move. If the worker is self-employed, “full-time” is considered at least 78 weeks in the 24 months after the move.

In addition to listing the deductible amount on Line 26 of Form 1040, taxpayers must attach Form 3903. The Form stipulated that if an employer reimbursed the taxpayer for any portion of the moving expenses, that portion cannot qualify for the deduction.

1Persons relocating to the United States from another country as a retiree are permitted to deduct their moving costs without needing to start a new job in the U.S. In other words, retirees from abroad do not need to meet the time test.

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