IRS Form 3903: Moving expenses you can deduct

IRS deductions when you move
According to the IRS, you may be able to deduct the reasonable expenses of moving your household goods and personal effects and of traveling from your old home to your new home. Reasonable expenses can include the cost of lodging (but not meals) while traveling to your new home. You cannot deduct the cost of sightseeing trips. If you move to a new home because of a new principal workplace, you may be able to deduct your moving expenses whether you are self-employed or an employee. But you must meet both the distance test and time test that follow.
 
Distance test: Your new principal workplace must be at least 50 miles farther from your old home than your old workplace was. For example, if your old workplace was 3 miles from your old home, your new workplace must be at least 53 miles from that home. If you did not have an old workplace, your new workplace must be at least 50 miles from your old home. The distance between the two points is the shortest of the more commonly traveled routes between them.
 
Time Test: If you are an employee, you must work full time in the general area of your new workplace for at least 39 weeks during the 12 months right after you move. If you are self-employed, you must work full time in the general area of your new workplace for at least 39 weeks during the first 12 months and a total of at least 78 weeks during the 24 months right after you move.
  • For more details on the qualifications for deducting moving expenses or reporting reimbursement, review IRS Publication 521, Moving Expenses. Also see Form 3903, Moving Expenses, which is used to figure the amount of the deduction.

Buying a Home: Many people find that home ownership allows them to itemize deductions on their tax returns. If you’re a first-time homeowner, you should know that mortgage interest, “points” paid to obtain the mortgage and real estate taxes are deductible expenses that can be itemized to help reduce the amount of taxes you owe. Other expenses that can be itemized and deducted include medical costs, certain state and local tax payments, charitable contributions, casualty losses and certain miscellaneous deductions. If the total amount of your itemized deductions is more than the standard deduction amount, you can usually benefit by itemizing. 

  • See if itemizing will make financial sense for you by reviewing Pub. 17, Your Federal Income Tax, and the instructions for Schedule A of the Form 1040. Review Pub. 530, Tax Information for First-Time Homeowners, for more information on allowable home-related deductions.

Selling Your House: If you sell your main home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return when it’s time to do your taxes. This exclusion is allowed each time that you sell your main home, but generally no more frequently than once every two years. To be eligible for this exclusion, your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale. You also must not have excluded gain on another home sold during the two years before the current sale.

  • If you and your spouse file a joint return for the year of the sale, you can exclude gain if either of you qualify for the exclusion. But both of you would have to meet the use test to claim the $500,000 maximum amount.
  • If you do not meet the ownership and use tests, you may be allowed to use a reduced maximum exclusion amount if you sold your home due to health, a change in place of employment or unforeseen circumstances. Unforeseen circumstances can include divorce or a disaster resulting in a casualty to your home, for example.
  • For more information, see Pub. 523, Selling Your Home.

Reporting Your Change of Address: If you have a new address, notify the U.S. Postal Service, so it can forward any tax refunds or IRS correspondence. The Postal Service will also pass your new address on to the IRS, which will update your account. You may also notify the IRS directly by sending Form 8822, Change of Address. Or write to the IRS center where you filed your most recent return and provide your full name, old and new addresses, Social Security number and signature. Remember to let your employers know about any address changes so you’ll receive your W-2s after the end of the year.

IRS publications and forms are available in the Forms and Publications section of this Web site, or you can order a free copy by calling toll-free 1-800-TAX-FORM (1-800-829-3676).

Important Note: This information was valid at the time of this writing...however...IRS rules change and are continuously updated so you must consult with a tax professional to determine if your moving expenses meet the IRS rules for deduction.
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