12.3 What Moving Costs Are Deductible?
You may deduct unreimbursed expenses of moving your household goods and traveling to a new job location, provided you meet
- A 50-mile distance test (12.4), and
- A 39-week or 78-week work test for remaining in the new location (12.5–12.6). A deduction may be claimed even if the work test has not been met by the filing due date (12.7).
You may be able to deduct moving costs if you move to take your first full-time job or if you are returning to full-time work after a long period of working part-time or being unemployed; see 12.4.
Members of the Armed Forces do not have to meet the distance and time tests if their move is to a permanent change of station; see the instructions to Form 3903.
You claim the moving expense deduction as an adjustment to gross income on Form 1040, Line 26, whether you claim the standard deduction or itemized deductions.
Filing Tip
If your expenses are reimbursed, you do not have to report the reimbursement, provided your employer reimburses you under an accountable plan (20.31, 12.8).
If the tests are met, you may deduct on your 2012 return the following unreimbursed moving expenses incurred during 2012:
In one case, a moving expense deduction was allowed for the cost of shipping a sailboat. The IRS had disallowed the deduction, claiming the sailboat was not a “personal effect.” The Tax Court, however, allowed the deduction based on these facts: the couple were active sailors and frequently used the boat; they lived on the sailboat for two weeks immediately before they moved and also for nine weeks after they arrived in the new location; and they kept on board personal effects such as a refrigerator, kitchen utensils, and chairs. According to the court, the boat was so “intimately related” to their lifestyle that it should be considered a deductible personal effect.
If you have to pay a fee to get out of your apartment lease when you move, the fee is not a deductible moving expense. If part of your apartment was a qualifying home office, you may be able to claim an allocable part of the lease cancellation fee as a home office deduction; see 19.13 and 40.12.
Delay in moving to new job location.
You may delay moving to the area of a new job location. A delay of up to one year does not jeopardize a deduction for moving expenses. Furthermore, if you move to the new job area within one year, your family may stay in the old residence for a longer period. Their later moving expenses will generally be deductible, even though incurred after one year. For example, the IRS allowed a moving expense deduction to a husband who immediately moved to a new job location, although his wife and children did not join him until 30 months after he began the new job. They delayed so that the children could complete their education. The IRS held that since part of the moving expenses were incurred within one year, the moving expenses incurred later were also deductible.
Nondeductible expenses.
Meal expenses while traveling to your new residence are not deductible.
You may not deduct the cost of pre-move house-hunting trips, temporary living expenses, or expenses of selling, purchasing, or leasing the old or new residence, such as attorneys’ fees, real estate fees, mortgage penalties, expenses for trips to sell your old house, a loss on the sale of the house, or costs of settling an unexpired lease. If you have to pay a fee to get out of your apartment lease when you move, the fee is not a deductible moving expense. If part of your apartment was a qualifying home office, you may be able to claim an allocable part of the lease cancellation fee as a home office deduction; see 19.13 and 40.12.
Other nondeductible costs include the cost of travel incurred for a maid, nurse, chauffeur, or similar domestic help (unless the person is also your dependent), the cost of transporting furniture that you purchased en route from your old home, expenses of refitting rugs and drapes, forfeited tuition, car tags or driver’s license for the state you move to, or forfeited club membership fees.
Note: If your employer reimburses you for such nondeductible costs, the amount of the reimbursement is treated as additional pay on Form W-2 (12.8).