How to Deduct Your Moving Expenses

One of moving’s saving graces is the opportunity to save money by deducting your moving expenses on next year’s taxes. Unfortunately, like all things related to the IRS, the process is pretty complicated. Luckily for you, we’ve put together the following guidelines to simplify things.

First things first… Can You Deduct Your Moving Expenses?

To qualify for a tax-deductible move, you need to meet two requirements of the IRS:

1) The Distance Test

Your new home needs to be 50 miles further away from your place of work than your last home was. Or, if you did not have a job (or worked from home) before, your new workplace must be at least 55 miles away from your old home.

2) The Time Test

You need work full-time for at least 39 weeks in the 12 months after the move. If you move late in the year, and can’t fit in 39 weeks before the end of the tax year, the IRS will still let you deduct your moving expenses if you plan to work 39 weeks of a full-time job. If you end up not doing so, you can always amend your tax return later, or deduct your savings as “other income” on next year’s tax return. Also, these weeks do not need to be consecutive, nor with just one employer!

Exceptions to the time test do exist. If any of the following situations apply to you, you are still eligible for move-related tax-deductions:

  • You’re transferred by your employer.

  • You’re fired for anything besides willful misconduct.

  • You have to leave the job due to becoming disabled.

  • You’re filling out the form for someone who has passed away.

  • You’re in the military and moving due to a permanent change of station.

  • You lived and worked abroad and are moving back to the US to retire.

  • You’re the dependent/spouse of a deceased person who worked and lived outside the US, and you’re moving from the deceased person’s home to a home in the US, within 6 months of their death.

You’re also allowed to deduct if you’re moving to the US from a home abroad, and if you’re moving abroad.

To see if you’re eligible to deduct moving expenses, the IRS has a helpful quiz you can take here.

What’s Deductible?

If you meet the requirements above, you can deduct the following expenses:

Travel Costs

  • Gas/oil for your vehicle

  • Highway tolls

  • Parking fees

  • Rental cars

  • Flight/train tickets

  • Hotel/motel charges (does not include meals)

Moving Costs

  • Moving company costs

  • Cost of storage up to 30 days

  • Packing materials: boxes, tape, crating, etc.

  • Costs of shipping pets and cars

  • Costs to insure your goods during transit

  • Fees to connect/disconnect utilities — Does not cover late fees or reimbursable deposits

Note that the IRS clearly states that only “reasonable”costs can be deducted, which basically means only those costs that require you to move directly from your old home to your new one. So if you’re moving from NYC to Boston, you can’t deduct the fuel costs for the detour you take to see your grandparents in upstate New York.

While this article covers most of the information you need to know, head to this IRS page for more details and exceptions, because when the IRS is concerned, there are always more details and exceptions!

Finally, if you’ll be filing your taxes yourself next year, use this form to deduct your moving expenses.

Good luck!

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How to Budget for Your Move in 3 Simple Steps

Step 1: Get Clear on Moving Costs

To set a budget for yourself, you need to figure out how much it’s going to cost you to move. You’re not going to be able to pinpoint an exact number, but if you think about it enough (and keep reading), you should be able to get a fairly accurate estimate.

Start with all the obvious, big expenses. These include:

  • Moving Companies. If you’re planning on hiring professionals, get quotes from 3–5 companies for a ballpark number to work with. Make sure to include whatever extra service options you plan on using: additional insurance coverage, full-service packing, storage, special crating for couches, pianos, refrigerators, etc.

  • Packing Materials. New boxes are surprisingly expensive. You have plenty of cheaper options available, like renting used boxes or picking them up for free from stores. Don’t forget bubble wrap, packing paper, and anything else you might need.

  • Transportation. If you’re driving to your new home, you need to budget for gas, obviously, but also for tolls and food/accommodation for multi-day drives. If you’re flying, budget for plane tickets, checked-luggage fees, over-weight baggage fees, and transportation to/from the airport.

  • Closing Costs. These can be significant if you’re buying a home. Even when leasing an apartment you typically have to provide the first month’s rent, a broker fee, and a security deposit that can be 1–2 month’s rent.

Next, do your best to think of all the sneaky, hidden expenses that will try to mess with your budget. Things like:

  • DMV fees for a new driver’s license and license plates, or to update your vehicle registration. More information on this here.

  • Vaccinations, veterinarian fees, new registration papers for your pets.

  • Missing work — a day’s missed paycheck is basically subtracting money from your bank account!

  • Food and water for friends/family that help you move.

  • Long-carry fees — if you live in the city and they can’t park right in front of your house, they’ll charge you upwards of $100 for every 75ft away from your door.

  • Elevator fees — Your building may charge upwards of $75 for this.

  • Utility security deposits and installation fees.

The more hidden fees you can think of here, the more accurate your budget is going to be.

Step 2: Set Up Your Budget

Once you’ve figured out how much you’re going to spend on moving, it’s time to find the money for it!

The basics of setting up a budget is getting crystal clear on 2 things: 1) what you’re already spending and 2) what you should be spending. Once you’ve done that, you can go about setting your budget and allocating money for the upcoming move.

There are great apps/websites out there that can help you with this. For a deep dive into setting up a budget, check out Ramit Sethi’s guides on the subject. And for help managing your finances, Mint and YouNeedABudget are both great places to start.

Step 3: Stick to Your Budget

This is where the rubber meets the road. While the above guides and websites will help you immensely in sticking to your budget, here are a few easy, money-saving tips to get you started:

  • No buying things in gas stations (besides gas!).

  • Ditch the cable. Use the internet or sign up for Netflix. Or use your older brother’s account!

  • Head to YouTube and learn some DIY home repairs and hacks.

  • Start using coupons: Groupon, LivingSocial, Entertainment, etc.

If it’s too late to create a budget and you need to move cheaply — check out our 7 Tips for Moving on a Budget!

Thanks for reading! If you liked this post, please recommend or share it with others. 🙂

Want to talk? Connect with Moved on Facebook, Twitter, and Instagram!