Moving expenses related to a change in employment present excellent tax-savings opportunities. However, three types of tests need to be met to take advantage of moving related expense deductions: a couple of distance tests, a “time to start work” test, and a "weeks worked test". And, of course, in typical government fashion,  a different set of rules can apply to members of the armed services and retirees. For now, lets keep things simple and work on the first tests mentioned.

Distance From New Home To New Job
The distance from the new home to the new job location must be less than the distance from the previous home to the new job location. This rule is waived if the taxpayer spends less time or money traveling from the new home to the new job than from the old home to the new job. For example, if the new home location enables the taxpayer access to public transportation, which was not accessible from the old home, the commuting time or costs may have decreased even if the distance has remained the same or even increased.  This distance test is also waived if the taxpayer, as a condition of employment, is required to live in a certian location.  This may be the case for certain law enforcement, fire officals, teachers, etc., where they are required to live in the community they serve.

50 Mile Test
A second distance test is applied to ensure the taxpayer’s new job requires relocation. This test requires the distance to the new job without the move to increase by at least 50 miles. The test is met if the distance from the old residence to the new job is at least 50 miles greater than the distance from the old residence to the old job.

Start of Work Test
The taxpayer must begin working in the new location within one year of the move, but it is not necessary that employment be obtained before the move. Although there are certain exceptions that allow the one-year period to be extended. For example, if the taxpayer delayed moving to the new location so that a child could complete the school year, the one-year period would be waived.

Weeks Worked Test
The taxpayer must be employed on a full-time basis at the new workplace for 39 weeks during the first 12 months following the move. Selfemployed taxpayers are required to work 39 weeks during the first 12 months and a total of 78 weeks during the first 24 months after relocation. Either the taxpayer or the taxpayer’s spouse can satisfy either the "start of work" test or the "weeks worked" test, but weeks worked cannot be combined to meet test requirements.

Deductions
All moving expenses that are deductible are “above-the-line deductions", meaning they are deductible regardless of whether the taxpayer itemizes their deductions or not. The cost of one trip from the old residence to the new residence per vehicle is allowed. Either actual expenses for gas and oil or a standard mileage rate may be used.

The benefits of deducting moving expenses can be sizable, but the rules and calculations are somewhat complex. I recommend consultation with an  accountant or tax attorney.

William "Art" Sexton
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