On the move? Watch for deductions

By Jeff Schnepper

In today's mobile society, few people spend their lives in a single location, let alone a single city. People are constantly moving, many for better jobs, in hope for a better lifestyle.

Moving expenses are tax-deductible if you meet certain qualifications. And the best part is you don't have to itemize to claim them. Moving expenses are considered "above-the-line" deductions. That means that you can claim them in addition to your standard deduction or your itemized deductions.

You can deduct moving expenses if you moved to a different home because of a change in job locations or if you started a new job. You can take the deduction whether you are self-employed or an employee. However, you must pass three tests: the working test, the distance test and the time test.

Working test

You have to be able to justify the move as job-related. That doesn't mean you have a job lined up before you make the move. But you do have to be working within a year of the move.

So if you worked for a big company and then moved 500 miles and bought a coffeehouse within a year, you pass the test.

Distance test

This sounds complicated, but it really isn't. Your new job location must be at least 50 miles farther from your former home than was your former job location. For example, if your old workplace was three miles from your old home, your new workplace must be at least 53 miles from that home. If you did not have an old workplace, your new workplace must be at least 50 miles from your old home.

Your principal job location is usually the place where you do most of your work and spend most of your time. A new principal job location is a new place where you will work on a permanent or indefinite basis rather than on a temporary basis.

If you work for a number of employers on a short-term basis or if you get work under a union hall system (such as many construction and building trades), use the distance between your home and the union hall.

Time test

To deduct your moving expenses, you must also meet one of two time tests:

If you are an employee, you must work full time at least 39 weeks during the 12 months after your arrival in the general area of your new job location. You don't have to work for one employer for the 39 weeks, nor do you have to work 39 weeks in a row. But you must work full time within the same general commuting area.

Whether you are employed full time depends on what's typical for your type of work. A schoolteacher on a 12-month contract who teaches on a full-time basis for more than six months is considered a full-time employee for the entire 12 months. Alternatively, if your work is seasonal, you are considered working full time during the off-season weeks if your contract or agreement covers an off season of fewer than six months.

Continued: What's deductible?

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