Timing the Moving Deduction

Posted by Lee Reams Sr. on

Taxpayers who move because of a change of work location may deduct certain related expenses.  The moving expense deduction is available for both employees and self-employed individuals if specific conditions are met; this includes taxpayers starting their first job. When moving expenses exceed reimbursements, the excess is an adjustment to gross income.

The general requirements to take a moving deduction require; the driving distance to be 50 miles or greater from the old home to the new job and an employee to work at the new job full time for 39 weeks of the first 52 weeks or a self-employed individual to work at the new location for 39 weeks of the first 52 weeks.

Strategy - Moving expenses can be deducted in the year they were paid or incurred OR if reimbursed, in the year in which reimbursement is received (as long as the expense is paid before the extended due date of the return).

This provides an opportunity to pick the best year for deducting the expenses. (Code Sec. 217(d)(2); Reg § 1.217-2(a)(2))  The taxpayer can also wait until the applicable condition is satisfied; then file an amended return claiming the deduction for the tax year the moving expense was paid or incurred. (Reg § 1.217-2(d))