If you move to a new job location this year, those friendly folks at the IRS may bestow an indirect subsidy for your moving expenses. The break comes in the form of a moving expense deduction that can cut your taxes. Whether you're moving because your present employer is relocating you to a new location, or you're starting work for a different company, you'll get a break at tax time.
The details are spelled out in Section 217 of the Internal Revenue Code. You get the deduction for moving expenses that you pay in connection with beginning work at a new principal place of work. (Of course, there's no deduction for expenses that are reimbursed by your employer.) The deductible expenses are the reasonable expenses of moving your household goods and personal effects from your former residence to your new residence.
Also, you can deduct the costs of traveling, including lodging, from your former residence to your new residence. For a spouse and children, these expenses are allowed only if the spouse and children have both your former residence and your new residence as their principal place of abode and are members of your household. The expense of meals isn’t deductible for either you or your family.
For use of your car to transport yourself, members of your household, or your belongings, deduct the actual cost of gas and oil (but not depreciation) or a flat allowance. For 2014, the allowance is 23.5 cents a mile. Whether you claim actual costs or use the mileage allowance, remember to deduct parking fees and bridge, tunnel, and turnpike tolls, as well.
The law imposes distance and time requirements. Under the distance requirement, your new principal place of work must be at least 50 miles farther from your former residence than was your former principal place of work. An example: You qualify if your former job was 20 miles from your former residence and your new job is more than 70 miles from your former residence.
Actually, you have some leeway on the 50-mile minimum. The law doesn’t require you to measure the distance on the basis of a straight line on a map. It’s okay to calculate the mileage on the shortest of the routes that you would ordinarily travel.
Under the time requirement, you must work for at least a specified period of time. During the 12-month period immediately following your arrival in the general location of the new job, you generally must be a full-time employee at that location for at least 39 weeks. If you expect to meet this requirement, you can claim the deduction on your 2014 return. It makes no difference that the 12-month test won’t be satisfied by the filing deadline for your return.
About the author:
Julian Block writes and practices law in Larchmont, New York, and was formerly with the IRS as a special agent (criminal investigator) and an attorney. More on this topic is available from "Julian Block’s Tax Deductible Travel and Moving Expenses", available for Kindle at Amazon.com and as a print copy at julianblocktaxexpert.com.