of Moving Expenses
it is not unusual to move from one city to another several
times during a lifetime, or to change jobs several times during
one’s career. If an employee or self-employed individual
incurs moving expenses in connection with the beginning of
a new principal place of work, an income tax deduction may
be allowed if certain distance and time tests are met. The
deduction is above-the-line (i.e., the expense is deducted
from gross income).
move will meet the distance test if the new principal place
of work is at least 50 miles farther from the taxpayer’s
former residence than the old principal place of work was
from the taxpayer’s former residence. For
individuals working for the first time, the principal place
of work must be at least 50 miles from their former residence
to meet the distance test. If an individual returns to full-time
work after a substantial period of unemployment or part-time
work, the new place of work must also be at least 50 miles
from the former residence.
principal place of work generally is the location where
the individual spends most of the time working. If there
is no single place where the individual spends most of the
time working, the principal place of work is the location
where the work is centered.
the individual has more than one job, the principal place
of work is generally determined based on the facts and circumstances
of each case. The following factors are considered:
total time spent at each location;
The amount of work or business activity at each location;
The amount of income earned at each location.
and self-employed individuals must meet their own time tests
in order for their moving expenses to be deductible.
An employee must work full-time for at least
39 weeks during the 12-month period following her arrival
in the general area of the new principal place of work.
The 12-month period begins on the date that the employee
arrives in the new job location, whether her family and
personal effects arrive with her or at a later date.
employee does not have to work for the same employer for
all 39 weeks for purposes of the 39-week rule. The 39 weeks
do not have to be consecutive. Time spent working as a self-employed
person does not count toward the 39-week requirement. The
employee must work full-time within the same general commuting
area for all 39 weeks. An employee is considered to have
worked full-time during any week that she temporarily misses
work due to illness, strikes, lockouts, layoffs, natural
disasters, or similar events. Vacation time provided for
in an employment contract or agreement is also considered
as full-time work for purposes of the 39-week requirement.
Seasonal employees are considered working full-time during
the off-season only if their work contract covers an off-season
period and if that period is less than six months.
individuals. A self-employed individual must
work full-time for at least 39 weeks during the 12-month
period following his arrival in the general area of the
new principal place of work and must also work full-time
for at least 78 weeks during the 24-month period after arriving
at the new work location.
person counts full-time work as a self-employed individual
or employee for purposes of the 39/78-week tests. The person
does not have to be self-employed in the same trade or business
or work for the same employer. The individual must work
full-time within the same general commuting area for all
78 weeks. A self-employed individual is considered to have
worked full-time during any week that he temporarily misses
work due to illness, strikes, natural disasters, or similar
events. If a self-employed individual’s trade or business
is seasonal, the off-season period may be counted as full-time
work if the off-season is less than six months and the person
works full-time before and after the off-season.
Employees and self-employed individuals do not have to meet
the time test if work at the new location ends because of
death or disability. Another exception occurs when an employee
is transferred for the employer’s benefit or the employee
is laid off for a reason other than willful misconduct.
For this exception to apply, the employee must have obtained
full-time employment with the expectation, at the time the
job began, that he would meet the time test.
employee or self-employed individual can deduct moving expenses
for a tax year even if he has not yet met the time test
by the due date (including extensions) for filing a tax
return for that year. If the time test is not met, the taxpayer
can either amend the return for the tax year that the moving
expenses were deducted, or report the moving-expense deduction
as other income on the return for the year that he cannot
meet the test.
types of individuals. The time test does not
have to be met by retirees who were working abroad and who
move to the United States or one of its territories. To
qualify, the retiree’s main job location and former
home must have been outside the United States. The individual
must be moving to a new home in the United States when she
permanently retires. A person is considered to be permanently
retired when gainful full-time employment or self-employment
time test also does not have to be met by survivors of decedents
working abroad. To qualify, the move must be to a new home
in the United States; the move must begin within six months
after the decedent’s death; the move must be from
the decedent’s former home; the decedent’s former
home must have been outside of the United States; and the
decedent’s former home must have been the survivor’s
home. For purposes of the moving-expense deduction, a survivor
is defined as a spouse or dependent of the decedent whose
principal job location at the time of death was outside
of the United States.
of the Armed Forces on active duty who move because of a
permanent change of station do not have to meet either the
distance or time tests.
expenses can be deducted for the cost of moving household
goods and personal effects from the former residence to
the new residence and for the cost of traveling (including
lodging, but not meals) from the former residence to the
new residence. Moving expenses must be reasonable for the
circumstances of the move.
household goods and personal effects includes the cost of
transporting furniture and personal effects of the taxpayer
and other members of the household, as well as the costs
of packing and in-transit or foreign-move storage. A member
of the household is anyone whose former home and new home
will be that of the taxpayer who is incurring the moving
cost of traveling from the old home to the new home should
be expenses incurred using the shortest, most direct route
available by conventional transportation. The costs of side
trips for sightseeing are not deductible moving expenses.
If the taxpayer travels by car, actual expenses such as
gasoline and oil can be deducted, or the special standard
mileage rate for moves can be used. In addition, parking
fees and tolls are deductible. General maintenance, repairs,
insurance, and depreciation of the vehicle are not deductible.
Expenses of only one trip to the new home are deductible,
but the entire household does not have to travel together
or at the same time.
domestic moves, the cost of storing and insuring household
goods can be deducted only for any period of 30 consecutive
days after the day that the goods are moved from the old
home and before they are moved to the new home. For foreign
moves (outside of the United States and its possessions),
the reasonable expenses of storing household goods for all
or part of the time that the new job location remains the
principal job location of the taxpayer are deductible. Reasonable
costs of moving household goods to and from storage are
also deductible. Many expenses that previously were deductible
as moving expenses, such as pre-move house-hunting expenses
and meals, are no longer deductible.
by employers. Employers often reimburse their
employees for job-related moves. The reimbursements should
not be included in wages if they are paid under an accountable
plan, if they are for moving expenses that the employee
could deduct if she had paid or incurred them, and if they
were not deducted in an earlier year.
a moving-expense reimbursement arrangement to be considered
an accountable plan, the expenses must be deductible by
the employee had she paid them herself. In addition, the
employee must adequately account to the employer for those
expenses within a reasonable period of time. Finally, any
excess reimbursement must be returned to the employer within
a reasonable period of time. If the arrangement is not considered
an accountable plan, the reimbursements must be reported
as wages on the employee’s Form W-2.
moving-expense reimbursements are reported as wages, a cash-basis
taxpayer can elect to deduct the moving expenses in the
year that the employer makes the reimbursement if the employee
paid the expenses in the year immediately after the year
of reimbursement, but no later than the due date (including
extensions) for filing the return for the tax year in which
the reimbursement was received. Reimbursements for nondeductible
moving expenses must be reported as wages regardless of
whether they are accounted to the employer by the employee.
Greenfield, CPA, is a director with Reminick, Aarons
and Company, LLP, in New York City. He is a member of the
NYSSCPA’s Taxation of Individuals Committee.