Relocation Expenses

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Whether or not you're reimbursed, some of your job-related moving expenses may be tax-deductible!

Reimbursement Methods[edit]

If your employer pays the movers directly, the expenses are excludable from income: they won't show up anywhere on your W-2, and you'll owe no tax on them.

If your employer reimburses you for specific relocation expenses, taxes will be withheld and the reimbursement will appear in Form W-2 Box 12 (NOT Box 1) along with the code 'P'. You will not owe tax on the tax-deductible portion of this reimbursement, so this will either reduce your taxes owed or increase the size of your refund.

If you are provided with a lump-sum reimbursement amount, you have to determine what is tax-deductible and do an extra form:

"Should you receive a lump sum payment for moving expenses, you are entitled to deduct your actual costs for household goods move, travel, and lodging as part of your final move, on IRS Form 3903, since the entire amount of the lump sum payment is reported as wages in Box 1 of your W-2."

Deductible Expenses[edit]

  1. Household Goods and personal effects, includes cost of van, packing, crating, insurance, disconnecting & reconnecting utilities, and all appliances, satellite dishes, antennas, cable, etc.
  2. Storage of household goods and personal items within a period of 30 consecutive days.
  3. Shipping a car, motorcycle, boat, and pets.
  4. Rental vans plus gas, oil, tolls, and parking fees.
  5. Tips for the movers, includes cost of food items, donuts, coffee, pizza and sodas, etc.
  6. Cost of any packing supplies you purchase for personal packing.
  7. Moving a college student,
  8. Transportation from Temporary living to your permanent home
  9. Rental car for final move up to four days – 3 days in old location – 1 day in new location.
  10. As of January 1, 2010, the IRS has adjusted the standard mileage allowances for use of a car in travel to 19.5 cents per mile for moving expenses.

Nondeductible Expenses[edit]

  1. Any part of the purchase price of your new home.
  2. Car tags.
  3. Driver's license.
  4. Expenses of buying or selling a home (including closing costs, mortgage fees, and points).
  5. Expenses of entering into or breaking a lease.
  6. Home improvements to help sell your home.
  7. Loss on the sale of your home.
  8. Losses from disposing of memberships in clubs.
  9. Mortgage penalties.
  10. Pre-move househunting expenses.
  11. Real estate taxes.
  12. Refitting of carpet and draperies.
  13. Return trips to your former residence.
  14. Security deposits (including any given up due to the move).
  15. Storage charges except those incurred in transit and for foreign moves.

Resources[edit]

S&M Moving Services: Relocation Tax Help

IRS Publication 521: Relocation