Can Uncle Sam Help Pay for Your Move?

Tax time is around the corner and if you’ve moved during 2010 you may be eligible for some tax breaks. Uncle Sam will pay you back if:

  • You are moving to a new location to start a job or a business or attend courses full-time at a post-secondary school or college.
  • The location of your new job must be at least 50 miles farther from your previous residence than your last job. So if you lived 10 miles from your old job, you have to live 60 miles from your old home before you can deduct moving costs.

You can deduct:

  • Traveling expenses including vehicle expenses, meals and lodging
  • Transportation and storage of personal items
  • Cost of canceling a lease at your previous residence
  • Up to 15 days of meals and accommodation near either residence if your moving dates do not coincide
  • Selling costs of your old residence including real estate commission
  • Legal fees on sale of previous residence and purchase of new residence
  • Mortgage penalty
  • Advertising
  • Legal fees and land transfer tax for purchase of new residence
  • Utilities disconnection/reconnection costs
  • Mortgage interest, insurance, property taxes and utilities associated with old residence while attempting to sell it, to a limit of $5,000 for maximum 3 month period

You can’t deduct:

  • Loss on the sale of your previous home
  • Expenses for house-hunting trips before your move
  • Cost of work done to your former residence to make it more sell-able

Keep in mind, however, that you can carry forward unclaimed moving expenses into the year following the move, to apply against that year’s earnings. You are not allowed to deduct moving expenses that are paid by your employer.

Moving Tax Deductions

If you’re married and file jointly, only one spouse needs to meet both the time and distance tests. You can’t combine the weeks your spouse worked with the weeks you worked to satisfy the time-employed component.

If you deduct moving expenses and then don’t meet the time requirements, you must file an amended tax return or include the moving expenses in your income the next year.

Details on moving expenses and tax deductions can be found in IRS Publication 521, Moving Expenses.