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Is Moving Tax Deductible?

If you're moving because of a job or business change, many costs can either be reimbursed by your employer or deducted from your taxes. The following is general information, for details pertaining to your specific situation always check with your tax professional.

Do you have to pay income tax on your reimbursements?

If you're an employee, your company might reimburse your moving costs in one of three ways:

  • Instead of giving you cash, your company might pay the moving company or other third party directly. In this case, the expenses are not included as part of your gross wages on your Form W-2, and you don't have to worry about associated tax liabilities.
  • If your employer reimburses you under an accountable plan (which requires you to return any excess reimbursement), the reimbursement is not taxable or included in your gross wages on your Form W-2.
  • If your employer reimburses you under a non-accountable plan (which does not require you to return any excess reimbursement), the reimbursement is included as taxable income on your Form W-2. You will need to complete Form 3903, Moving Expenses, to deduct the offsetting expenses.
  • The best scenario is to have your employer cover all moving expenses, including house-hunting trips, meals, storage, and temporary living expenses, which are not typically deductible. To ensure that you experience no penalty for moving, more generous employers sometimes provide a "gross-up payment" or an extra month's salary to cover the taxes you'll have to pay on that additional income.

Deductible or Non-deductible – that is the question.

You may not get all your moving expenses reimbursed. If your company reimbursed only some expenses, look for other non-reimbursed expenses that might be deductible.

Remember that the deduction doesn't give you a full reimbursement; it only provides a deduction for the percentage that reflects your tax bracket. For example, suppose that your deductible moving expenses were $10,000. If you're in the 28 percent tax bracket, you'd have only $2,800 in tax savings to offset what you paid out of pocket to move.

Most state income taxes include the same deductions as for federal income tax, so you can recoup some moving expenses this way as well.

Deduction Checklist

If your employer is reimbursing your moving expenses and the reimbursements are not included in your taxable income, you cannot deduct those same expenses. However, if your reimbursements are included in your income, you may deduct moving expenses to offset those reimbursements. Also, if there are expenses your employer is not reimbursing, or if you're self-employed, you can most likely deduct the following:

  • Expense of moving your household goods and personal effects
  • Cost of connecting or disconnecting utilities
  • Charges for shipping your car and pets to the new home
  • In-transit storage expenses for up to 30 days after you leave the previous home, if you're moving within the United States
  • All storage fees, if you're moving outside the United States
  • Lodging expenses, incurred while traveling to your new home
  • Transportation cost to your new home, by the most direct route

If you're driving your own car to move your belongings, members of your household, or yourself, you can deduct the mileage (see your tax professional for current per mile allowances). On the other hand, if you keep accurate records, you can deduct actual expenses for gas and oil. Either way, you can deduct parking fees and tolls paid in the course of moving. If you're flying yourself or family members to your new location, you can even deduct the cost of airfare.

Keep all receipts associated with the move, including the moving company or truck rental, boxes and other packing supplies, and movers. Using your credit card or checkbook is the easiest way to maintain the all-important paper trail, although you'll pay some expenses with cash. Make a note on any receipts that aren't self-explanatory. If you pay a moving expense without a receipt, for example, for mover tips, write yourself a receipt on a slip of paper.

Deduction No-No’s

Certain expenses that you're likely to incur as part of your move are not deductible:

  • Meal costs
  • Travel expenses for side trips for visits or sightseeing en route to your move destination
  • Storage charges, except those incurred in-transit and for foreign moves
  • Temporary living expenses such as Hotels or Motels and temporary rentals.

Note that you cannot take a moving expense deduction and a business expense deduction for the same expense.

How Far Can You Take It?

To claim moving expenses, the distance between your old home and new job location must be at least 50 miles farther than the distance between your old home and old job location.

Let's say that the distance between your old home and old job location was 10 miles. If you change jobs, your new job location would have to be at least 60 miles from your old home—that is, 10 miles plus 50.

Procrastination Does Not Pay.

You can generally deduct moving expenses only when incurred within one year from the date you first reported to work at the new location. If you move later than one year from starting work, you must show that extenuating circumstances delayed your move. A legitimate situation might be waiting 18 months until your teenager completes high school.

As an employee, you must work full time for at least 39 weeks during the first 12 months after arriving at your new job location. If self-employed, you must work full time for at least 39 weeks during the first 12 months and at least 78 weeks during the first 24 months of arriving at your new business location.

Final Thoughts

It’s always a smart idea to explore the tax considerations for selling your old home and buying a new one. Sit down with your accountant and examine your options. It helps to develop your tax strategy well in advance of your move. Place yourself in the best position for maximizing your tax savings and minimizing your out-of-pocket expenses of moving.

For more information, also check and

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