#1 - WHAT IS THE MOVING EXPENSE DEDUCTION?
• Moving expenses may be deductible for individuals who begin employment at a new principal place of work.
• The deduction is available to both employees and self-employed individuals.
• Taxpayers who claim the standard deduction may still be eligible to deduct moving expenses.
• Moving expenses must generally be incurred within one year of commencing work at a new location.
#2 - QUALIFICATION - DISTANCE TEST
• The new job must be at least 50 miles farther from the old residence than the old residence was from the previous location of employment.
• Essentially, the relocation must mitigate at least a 50-mile potential increase in the taxpayer's commute.
• The location of the new residence is not a factor in the distance test.
• A taxpayer's main work location is where he or she spends the majority of working time.
• If a taxpayer holds more than one job, facts and circumstances will determine the main job location.
• Active-duty members of the armed forces do not need to meet the distance test due to a permanent station change.
#3 - QUALIFICATION - TIME TEST
• An employee must be employed full-time at the new location for 39 weeks during the 12-month period following the move.
• Self-employed taxpayers must work in the new location for 78 weeks during the next 24 months and the first 39 weeks must occur in the first 12 months subsequent to the relocation.
• The time test will not apply if the taxpayer dies, becomes disabled, is transferred by the new employer or if the taxpayer is discharged for reasons other than willful misconduct.
• If the time test has not been met by the tax return's due date, the taxpayer may still take the deduction. However, the taxpayer will be required to recapture the deduction or file an amended tax return if the time test is subsequently not satisfied. Alternatively, the taxpayer could wait and file an amended tax return once the time test has been met.
• Active-duty members of the armed forces do not need to meet the time test due to a permanent station change.
#4 - ELIGIBLE EXPENSES
• Qualified expenses include reasonable expenses of moving household goods and travelling to the new residence.
• Lodging and automobile expenses qualify as potential moving expenses.
• Meals do not qualify.
• Many other expenses do not qualify. New vehicle registrations, new driver license fees, loss on the sale of the former residence, penalties for early termination of leases, forfeitures of security deposits, house-search expenses and temporary living expenses are just a few examples of ineligible expenses.
#5 - EMPLOYER REIMBURSEMENT
• If an employer reimburses qualified expenses or directly pays for such expenses, the amounts will not be included in the employee's gross income. However, the employee will not be eligible to deduct such expenses.
• If an employer reimburses or pays non-qualified expenses, the amounts will be included in the gross income.