I was recently asked if moving expenses were deductible if the taxpayer is just moving within the same town. My answer was “No,” because the move doesn’t meet the distance test.
Simply put, you can’t deduct a move unless a new job would have added 50 miles or more to your daily commute from your old home. So you need to figure how far your old job was from your old home (your previous one-way commute.) Then figure how much farther you’d have had to travel to your new job if you hadn’t moved. If the difference is 50 miles or more, you can claim a deduction.
If you have never been employed before and are moving to take your first job, the new workplace must be at least 50 miles from the old home.
None of these rules apply to members of the Armed Forces. They do not have to meet this distance test.
For any move to be deductible, of course, it must be closely related to a change in the taxpayer’s job location.
The move must be connected to a new job location. Those who have retired and are relocating for non-work reasons will not be entitled to this deduction.
In addition to the distance test, a move must qualify under a time test, in terms of how long the taxpayer works at the new job.
Employees must work full time in the general area of the new workplace for at least 39 weeks during the 12 months after the move. Self-employed individuals must work full time for at least 39 weeks during the first 12 months after the move and 78 weeks during the first 24 months after the move. As in most areas of tax law, there are exceptions. The time test will not apply if the job ends because of disability, the employer transfers the employee, the employee was laid off for reasons other than willful misconduct, the taxpayer is a member of the Armed Forces, or the taxpayer has died. Certain situations for retirees or survivors living outside the U.S. can also exempt a taxpayer from the time test.
If you meet all the criteria described above, here is what you get to deduct:
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