Who Can Deduct Moving Expenses

Who Can Deduct Moving Expenses

  • You can deduct your moving expenses if you meet all three of the following requirements.
  • Your move is closely related to the start of work.
  • You meet the distance test.
  • You meet the time test.

After you have read these rules, you may want to use Figure B to help you decide if you can deduct your moving expenses.

Retirees, survivors, and Armed Forces members.   Different rules may apply if you are a member of the Armed Forces or a retiree or survivor moving to the United States. These rules are discussed later in this publication.

Move Related to Start of Work

Your move must be closely related, both in time and in place, to the start of work at your new job location.

Closely related in time.   In most cases, you can consider moving expenses incurred within 1 year from the date you first reported to work at the new location as closely related in time to the start of work. It isn’t necessary that you arrange to work before moving to a new location, as long as you actually go to work in that location.

 Figure A. Illustration of Distance Test

If you don’t move within 1 year of the date you begin work, you ordinarily can’t deduct the expenses unless you can show that circumstances existed that prevented the move within that time.

Example.

Your family moved more than a year after you started work at a new location. You delayed the move for 18 months to allow your child to complete high school. You can deduct your moving expenses.

 

Closely related in place.   You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location isn’t more than the distance from your former home to the new job location. If your move doesn’t meet this requirement, you may still be able to deduct moving expenses if you can show that:

  • You are required to live at your new home as a condition of your employment, or
  • You will spend less time or money commuting from your new home to your new job location.

Home defined.   Your home means your main home (residence). It can be a house, apartment, condominium, houseboat, house trailer, or similar dwelling. It doesn’t include other homes owned or kept up by you or members of your family. It also doesn’t include a seasonal home, such as a summer beach cottage. Your former home means your home before you left for your new job location. Your new home means your home within the area of your new job location.

Retirees or survivors.   You may be able to deduct the expenses of moving to the United States or its possessions even though the move isn’t related to the start of work at a new job location. You must have worked outside the United States or be a survivor of someone who did. See Retirees or Survivors Who Move to the United States, later.

Distance Test

Your move will meet the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. For example, if your old main job location was 3 miles from your former home, your new main job location must be at least 53 miles from that former home. You can use Worksheet 1 to see if you meet this test.

Worksheet 1. Distance Test

The distance between a job location and your home is the shortest of the more commonly traveled routes between them. The distance test considers only the location of your former home. It doesn’t take into account the location of your new home. See Figure A.

Example.

You moved to a new home less than 50 miles from your former home because you changed main job locations. Your old main job location was 3 miles from your former home. Your new main job location is 60 miles from that home. Because your new main job location is 57 miles farther from your former home than the distance from your former home to your old main job location, you meet the distance test.

First job or return to full-time work.   If you go to work full time for the first time, your place of work must be at least 50 miles from your former home to meet the distance test.

If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home.

Armed Forces.   If you are in the Armed Forces and you moved because of a permanent change of station, you don’t have to meet the distance test. See Members of the Armed Forces, later.

Main job location.   Your main job location is usually the place where you spend most of your working time. This could be your office, plant, store, shop, or other location. If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work.

Union members.   If you work for several employers on a short-term basis and you get work under a union hall system (such as a construction or building trades worker), your main job location is the union hall.

More than one job.   If you have more than one job at any time, your main job location depends on the facts in each case. The more important factors to be considered are:

  • The total time you spend at each place,
  • The amount of work you do at each place, and
  • How much money you earn at each place.

Time Test

To deduct your moving expenses, you also must meet one of the following two time tests.

  • The time test for employees.
  • The time test for self-employed persons.

Both of these tests are explained below. See Table 1 for a summary of these tests.

You can deduct your moving expenses before you meet either of the time tests. See Time Test Not Yet Met , later.

Time Test for Employees

If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location (39-week test). Full-time employment depends on what is usual for your type of work in your area.

For purposes of this test, the following four rules apply.

  • You count only your full-time work as an employee, not any work you do as a self-employed person.
  • You don’t have to work for the same employer for all 39 weeks.
  • You don’t have to work 39 weeks in a row.
  • You must work full time within the same general commuting area for all 39 weeks.

Temporary absence from work.   You are considered to have worked full time during any week you are temporarily absent from work because of illness, strikes, lockouts, layoffs, natural disasters, or similar causes. You are also considered to have worked full time during any week you are absent from work for leave or vacation provided for in your work contract or agreement.

Seasonal work.   If your work is seasonal, you are considered to be working full time during the off-season only if your work contract or agreement covers an off-season period of less than 6 months. For example, a school teacher on a 12-month contract who teaches on a full-time basis for more than 6 months is considered to have worked full time for the entire 12 months.

Figure B. Can You Deduct Expenses for a Non-Military Move Within the United States?1

This image is too large to be displayed in the current screen. Please click the link to view the image.

Time Test for Self-Employed Persons

If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you arrive in the general area of your new job location (78-week test).

For purposes of the time test for self-employed persons, the following three rules apply.

  • You count any full-time work you do either as an employee or as a self-employed person.
  • You don’t have to work for the same employer or be self-employed in the same trade or business for the 78 weeks.
  • You must work within the same general commuting area for all 78 weeks.

Example.

You are a self-employed accountant who moves from Atlanta to New York City, and begin to work there on December 1, 2016. You pay moving expenses in 2016 and 2017 in connection with this move. On April 15, 2017, when you file your income tax return for the year 2016, you have been performing services as a self-employed individual on a full-time basis in New York City for approximately 20 weeks. Although you haven’t satisfied the 78-week employment condition at this time, you can deduct your 2016 moving expenses on your 2016 income tax return as there is still sufficient time remaining before December 1, 2018, to satisfy such condition. You can deduct any moving expenses you pay in 2017 on your 2017 income tax return even if you haven’t met the 78-week test. You have until December 1, 2018, to satisfy this requirement.

Self-employment.   You are self-employed if you work as the sole owner of an unincorporated business or as a partner in a partnership carrying on a business. You aren’t considered self-employed if you are semi-retired, are a part-time student, or work only a few hours each week.

Full-time work.   You can count only those weeks during which you work full time as a week of work. Whether you work full time during any week depends on what is usual for your type of work in your area. For example, you are a self-employed dentist and maintain office hours 4 days a week. You are considered to perform services full time if maintaining office hours 4 days a week isn’t unusual for other self-employed dentists in your area.

Temporary absence from work.   You are considered to be self-employed on a full-time basis during any week you are temporarily absent from work because of illness, strikes, natural disasters, or similar causes.

Seasonal trade or business.   If your trade or business is seasonal, the off-season weeks when no work is required or available may be counted as weeks during which you worked full time. The off-season must be less than 6 months and you must work full time before and after the off-season.

Example.

You own and operate a motel at a beach resort. The motel is closed for 5 months during the off-season. You work full time as the operator of the motel before and after the off-season. You are considered self-employed on a full-time basis during the weeks of the off-season.

If you were both an employee and self-employed, see Table 1 for the requirements.

Example.

Justin quit his job and moved from the east coast to the west coast to begin a full-time job as a cabinet-maker for C and L Cabinet Shop. He generally worked at the shop about 40 hours each week. Shortly after the move, Justin also began operating a cabinet-installation business from his home for several hours each afternoon and all day on weekends. Because Justin’s principal place of business is the cabinet shop, he can satisfy the time test by meeting the 39-week test.

If Justin is unable to satisfy the requirements of the 39-week test during the 12-month period immediately following his arrival in the general location of his new principal place of work, he can satisfy the 78-week test.

Joint Return

If you are married, file a joint return, and both you and your spouse work full time, either of you can satisfy the full-time work test individually. However, you can’t add the weeks your spouse worked to the weeks you worked to satisfy that test.

Time Test Not Yet Met

You can deduct your moving expenses on your 2016 tax return even though you haven’t met the time test by the date your 2016 return is due. You can do this if you expect to meet the 39-week test in 2017 or the 78-week test in 2017 or 2018.

If you don’t deduct your moving expenses on your 2016 return, and you later meet the time test, you can file an amended return for 2016 to take the deduction. See When To Deduct Expenses , later, for more details.

Failure to meet the time test.    If you deduct moving expenses but don’t meet the time test in 2017 or 2018, you must either:

Report your moving expense deduction as other income on your Form 1040 for the year you can’t meet the test; or

Use Form 1040X to amend your 2016 return, figuring your tax without the moving expense deduction.

Example.

You arrive in the general area of your new job location, as an employee, on September 12, 2016. You deduct your moving expenses on your 2016 return, the year of the move, even though you haven’t yet met the time test by the date your return is due. If you don’t meet the 39-week test during the 12-month period following your arrival in the general area of your new job location, you must either:

Report your moving expense deduction as other income on your Form 1040 for 2017; or

Use Form 1040X to amend your 2016 return, figuring your tax without the moving expense deduction.

Exceptions to the Time Test

You don’t have to meet the time test if one of the following applies.

  • You are in the Armed Forces and you moved because of a permanent change of station. See Members of the Armed Forces , later.
  • Your main job location was outside the United States and you moved to the United States because you retired. See Retirees or Survivors Who Move to the United States , later.
  • You are the survivor of a person whose main job location at the time of death was outside the United States. See Retirees or Survivors Who Move to the United States , later.
  • Your job at the new location ends because of death or disability.
  • You are transferred for your employer’s benefit or laid off for a reason other than willful misconduct. For this exception, you must have obtained full-time employment and you must have expected to meet the test at the time you started the job.

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