Sometimes, our job may require us to relocate to a new location. That can get costly, especially if you are paying for it yourself. You may qualify to deduct a significant portion of your relocation expenses if you’ve moved as a result of a change in your job. While you can’t deduct meals, other expenses can be deducted if you meet three tests:
- The date of your move coincides within a reasonable time frame to the start of the new job
- You meet the distance requirements
- You meet the time requirements
Start Date
When you move, your relocation date has to be close to the day you start working at the new job or location. For these purposes, the acceptable time frame is within a year from move to start. The distance between the new location and your new home cannot be greater than the distance between the two places you formerly occupied.
Distance Test
Your new location of employment has to be more than 50 miles farther from your old home than your previous employment. If there was no place of employment prior, your new employment must be more than 50 miles away from your previous home.
Time Test
You have to work full-time for at least thirty-nine weeks within the first year of your move. Self-employed individuals must meet the thirty-nine weeks test as well as have a total workload of 78 weeks within two years from moving. Death, disability, and involuntary separation are a few of the exceptions to the time test. Additionally, military personnel relocating under direct order aren’t required to meet the time test.
Relocation expenses are deducted by making an adjustment to income on a Form 1040, using Form 3903, Moving Expenses, to calculate the deduction.
