Moving Expenses

Moving expenses incurred or reimbursed may qualify as deductible moving expenses provided that the move satisfies certain requirements involving work, distance and time.

• Work Related Test – The date of the move must be closely related in both time and place to the start of work at a new job location.
• Distance Test – The distance between your new primary place of work and your old residence must be at least 50 miles greater than the distance between you old primary place of work and your old residence. In other words, had you remained in your old home, your commute must be at least 50 miles longer each way.
• Time Test – In the 12-month period immediately after the move, you must work full time for at least 39 weeks. This test may be waived if the failure to meet it is due to death, disability or an involuntary separation from employment, or if you get transferred again for the benefit of your employer.

Deductible Moving Expenses

Expenses that may be deducted must have been paid by you and not reimbursed by your employer. The expenses must be reasonable for the circumstances of your move.

If your move meets the three tests, you will be allowed to deduct the expenses you incurred for:

• Transportation of household goods and personal effects.
• Travel expenses from your old home to your new home during the trip.

Employer Provided Moving Expense Reimbursements

All moving expenses that your employer either directly reimburses, or pays on behalf of the employee (other than certain “excludable” reimbursements) will be included in the employee’s gross income as compensation.

Some of the most common taxable reimbursements include:

• Temporary living expenses
• House hunting expenses
• Meals
• Expenses related to selling or purchasing a home
• Reimbursement for loss on the sale of your home
• Spousal assistance program
• Tax assistance or gross-up payments

“Excludable” Reimbursements

An excludable reimbursement occurs when an employer pays for expenses, which qualify as deductible moving expenses, whether paid directly to third party or reimbursed to the employee. These payments are excluded from your taxable compensation. As these reimbursements are excluded from your compensation, they are not allowed as a deductible moving expense on your return.

Lump Sum Payments

It is up to you to keep track of your deductible moving expenses. Quite often an employer may offer a lump sum payment program to cover your moving expenses. Generally, the full amount is included in your taxable income. To help keep track of your expenses, and categorize them into deductible and nondeductible, we have provided you with a moving expense worksheet below.

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