Each year, millions of people relocate to a new location within the U.S., usually due to a new job. Between 2008 and 2009, over 37.1 million residents packed their belongings and moved into a new home or apartment in a new city, county or state, according to the U.S. Census Bureau.
Even in the best economic climate, getting the most out of every dollar helps. If you’re in the middle of moving to another place, you may be able to get Uncle Sam to foot the bill for some of your moving expenses.
Writing off Moving Expenses
A tax deduction is one of the best ways to lessen your financial liability and get a little cash back in the process. Fortunately, you can offset the costs of moving to your new home by deducting most of your moving expenses. To take advantage of the savings, you’ll need to complete and attach IRS Form 3903 (Moving Expenses) in your next income tax return.
Keep in mind that the IRS can be a bit of a stickler when it comes to deductions. To stay in the clear, you have to meet the following three criteria:
- Your new job is 50 miles farther from your old home than your old job was from your old home. If you didn’t have a prior job, your new place of work has to be 50 miles farther from your old home. For example, you’re in the clear if your new job happens to be 500 miles away from your old home, but not so much if you’re just moving to another place that’s 10 miles away.
- You must work full-time for a minimum of 39 weeks during the 12 months after starting your new job. If you’re self-employed, you’ll have to work at least 78 weeks during the first two years after starting your new job.
- Your move must be “closely related” in both time and place. Not only must your moving expenses occur within a year of the date you started work at your new place of employment, but the distance between your new home and new job must be shorter than the distance from your old home to your new job.
What Can I Deduct?
Once you manage to get those requirements out of the way, you’ll be able to make deductions on a variety of moving expenses. For instance, you’ll be able to deduct the out-of-pocket costs of packing and moving your stuff to your new home. You can even deduct the cost of shipping your pets.
Other potential expenses you can deduct from your taxes include:
- Property storage fees
- Travel from your old home to your new home
- Vehicle shipping costs
- Costs to disconnect and re-establish utilities
However, there’s a limit to how much you’ll be able to deduct. Try as you might, but you won’t be able to get a tax credit for any of the following expenses:
- Any out-of-pocket relocation costs reimbursed by your employer
- Any money you spent while buying or selling your home
- Dining expenses
- House hunting expenses
- Any return trips you’ve made to your old home
Don’t forget to keep all of your receipts related to the move in a safe, secure place. It’s not often that these deductions trigger an audit, but it always helps to be prepared just in case.