As the calendar approaches April, and the 2018 deadline to file tax returns, questions about how exactly to fill out those taxes are bound to become more popular, especially for first-time filers. After all, those first-time filers, like recent college graduates who moved to a new location for a job opportunity, have the most reason to be curious about what they can and cannot deduct from their taxable income. For those types of filers, this question may be of most importance: Can you write off moving expenses while filing your taxes?
The answer is a definite yes, but there are some parameters. The government agency that collects your taxes, i.e. the Internal Revenue Service (IRS), has laid out a couple of rules that are seemingly meant to determine whether the moving expenses were necessary to complete a specific job. The IRS also allows filers to write off what it calls "reasonable" moving expenses.
A description of the IRS' policy on writing off moving expenses is available on the agency's official website. The description reads,
If you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses but not any expenses for meals. You can deduct your moving expenses if you meet all three of the following requirements.
The description then goes on to cover what those three requirements are: that the move "closely relates to the start of work," that the move meets "the distance test," and that the move meets the "time test."
In general, the deduction for moving expenses is related to the costs of (literally) moving yourself and your belongings from one place to another, according to Intuit, the makers of the tax-filing software, Turbo Tax.
This means that the deduction is most useful for expenses that covered the cost of travel and transport, like an airplane ticket or the cost of having your car shipped to another state.
If you're wondering how exactly a certain move from one location to another meets the criteria, don't worry, the IRS describes that as well. First, there's a pretty large window of time for a move that's considered to be "closely related to work."
"Your move must closely relate both in time and in place to the start of work at your new location. You can consider moving expenses incurred within one year from the date you first reported to work at the new location as closely related in time to the start of work," the IRS website says. "A move generally relates closely in place 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."
As for the "distance test," the IRS says your new job should be a certain amount of distance father from your previous home than your old job was.
"Your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home," the IRS moving expenses policy states. "If you had no previous workplace, your new job location must be at least 50 miles from your old home."
That means if you were already enduring a long commute, but decided to move for a new job because it'd require travel to a location that was 30 miles farther, you just may be out of luck.
Lastly, there's the time test. The IRS stipulates that a tax filer should have worked at a new job for over a specific amount of time, in order for the moving expenses related to that job to be deductible.
"If you're an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. If you're 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 immediately following your arrival in the general area of your new work location," the policy says. "There are exceptions to the time test in case of death, disability, and involuntary separation, among other things."
In other words, if you don't get fired or change jobs quickly after moving to a new location, far away from your previous home, you just may be able to deduct your moving expenses from your taxable income.