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Moving Expenses Tax Deduction: What’s Deductible and Nondeductible?

Moving Expenses Tax Deduction: What’s Deductible and Nondeductible?

Did you move because of a change in work location last year?

In this tough economy, many Americans are moving to find work. They can offset some of the expense of packing up for greener pastures by taking a tax deduction for moving expenses.

It’s important to know what you’ll be able to deduct before you move so you can avoid nondeductible expenses as much as possible, and keep good records of the expenses you can deduct.

Changes to tax laws for moving expenses

The rules for moving expenses are far less generous than they have been in years past, however. In years past, you could deduct expenses for a house-hunting trip. That’s gone by the wayside.

You can no longer deduct meals during a move. If you drive a moving truck across the country with the family, all those restaurant meals are non-deductible.

If your employer reimburses you for nondeductible expenses such as meals, you may have to pay tax on the reimbursement.

Deductible moving expenses

If you move more than 50 miles for work, and you or your spouse work at least 39 weeks in your new location (78 weeks if you are self-employed), you generally can deduct the following moving expenses:

  • Auto expenses, using either actual expenses or the standard rate for moving (23 cents per mile in 2012)
  • Parking and tolls
  • Lodging during the move
  • Cost to move household goods and personal items
  • In-transit and foreign-move storage expenses
  • One trip per member of your household
  • Lodging en route, including one day at the old location and one day at the new location

Nondeductible moving expenses

You cannot deduct:

  • Additional vehicle expenses, such as general repairs, maintenance, insurance, or depreciation
  • House-hunting trip expenses, or any other travel that exceeds one trip per member of your household
  • Costs of settling in to your new home, including car tags, dog licenses, driver’s license, or club fees
  • Security deposits lost at the old home
  • The cost of breaking a lease at the old home
  • Costs of selling the old home or buying a new one, including closing costs, mortgage fees, and points
  • Loss on the sale of the old home
  • Lost memberships and so on at the old location
  • Return trips to settle affairs at the old home
  • Meals during the move
  • Storage for an extended period of time after the move
  • Any expenses for which you take a business deduction
  • Additional expenses for sightseeing, or the extra expense of taking a circuitous, scenic route.
  • Fix-up expenses at the old home

Has the state of the economy influenced your decision to move to take a new job?

Photo credit: Mpopp via photopin cc

About Sally Herigstad

Sally Herigstad is a certified public accountant and personal finance columnist and author of Help! I Can't Pay My Bills, Surviving a Financial Crisis (St. Martin's Griffin). She writes regularly at CreditCards.com, Bankrate.com, Interest.com, RedPlum, and MSN Money. She is an experienced speaker and a member of Toastmasters International. Follow Sally on Twitter.