Can I Really Deduct my Moving Expenses?

When you file your income taxes, you may notice that there is this little area that asks you about moving expenses. If you moved at any point during the tax season you are filing on, then you may be able to deduct some of those moving expenses. We all know that moving is expensive, so this can provide somewhat of a break. However, there are two tests that you have to satisfy in order to be able to deduct your moving expenses.

But first, you can only deduct your moving expenses if you are moving because you have changed jobs, your business location changed, or you moved to start a new business. If your move had nothing to do with any of these, then you will not be able to deduct your moving expenses. You must also make sure you are not claiming a deduction on moving expenses that were already reimbursed by your employer.

Here are the two tests that you must pass:

• The "distance test" entails that you must move 50 miles or more from where your old job was from where you used to live. For instance, you may have had a 25 mile commute to work each day. This means that you need to move 75 miles away from your old home before you can claim a deduction. If you did not have to travel to go to work each day and worked out of your home, then the new location must be at least 50 miles from your old home.
• The second test is called the "time test." This test states that you have to work full time for at least 39 weeks within the first 12 months of your move. For the self-employed, you have to work 39 weeks at full time and a total of 78 weeks in the first two years to be able to deduct your moving expenses. There are exceptions to this test, such as being terminated from your job, disability, or death.

The only way you do not have to satisfy either one of these tests is if you are a member of the military and you moved because you had a permanent change of location.

Because you have to satisfy the time test, you can take two years to claim your moving expenses deduction. When filing your taxes, there is an area that asks you if there are any moving expenses that you did not claim in previous tax years. This is where you will claim your expenses. This is especially useful to the self-employed because they have to satisfy the time test in a period of two years. That's unless they are able to satisfy the 78 weeks at full time within the first year. The time test only requires that the full time hours are put in within the first two years.

If you move to a foreign country and you earn income from that country, then you cannot claim the deduction. This is excludable income. If the move was made with income you earned in the U.S. and you can pass the above tests, then you can claim the deduction on your U.S. tax return.