Corporate Relocation And The IRS: Claiming Your Move As A Deductible Business Expense

Posted on: 16 January 2015

When you have to relocate (with the help of corporate movers) for a new job, it can be a huge change. The process can be incredibly daunting -- especially the price tag of a move, which can range in the thousands. Fortunately, if you're moving for a new job and your boss isn't compensating you for the costs, you may be able to get a little relief from the IRS: moving for new work is considered to be a tax deductible business expense, in the right circumstances.

Distance Affects Your Deduction

Not all moves qualify, however. In general, your move must be at least over 50 miles from your current location in order to potentially meet the standards for a tax deduction. You also need to consider the distance from your old home to work versus the distance from your new one. For example, if you move 50 miles away but end up closer to your job than before, you probably won't qualify for a deduction. 

In your calculations, you should use the shortest possible route to work, including public transportation. For example, if a subway ride to the office is 10 miles long at its shortest and a drive is 15 miles at its shortest, you must calculate the distance of your move using the subway route. If your new home is more than 50 miles away plus the distance of your previous commute using the shortest possible commute, then you meet the distance criteria for a tax deductible move.

Full-Time Work Is Required

Your old job may have been part time, but your new work must be full-time in order to qualify for tax benefits. However, the meaning of full-time is somewhat nebulous according to the IRS. According to TurboTax, full-time work does not have to be a set number of days or hours per week to meet IRS requirements, but is instead based on the current industry standard for a full-time worker.

If you are a full-time employee in your chosen industry, you haven't passed all the hurdles yet for a sufficient time worked qualification. You must also work at least 39 weeks full-time in the 12 months after moving to your new location. Fortunately, you don't have to work all of those weeks for one employer, so you can pick up additional full-time work to supplement your schedule if you want to qualify for a tax deduction. You also don't have to work for 39 weeks in a row, even across jobs.

The Deduction Comes With A Caveat

Even though deductible moving expenses require you to work a certain number of weeks in the year after your move, the IRS makes the deduction available to you only on the return directly after your move is complete. For many employees, this means guessing as to how many weeks you'll work in the next year and claiming before you meet all of the standard necessary. This, in itself, is not a problem at all for the IRS, but it may be a problem for you.

Unlike other money you get back on your tax return, a deduction for moving expenses should be handled with care: if you fail to work enough full-time weeks to qualify for it, the IRS will ask you to reverse the deduction. In layman's terms, you'll have to pay back all of the expenses for which you were reimbursed to the IRS. For this reason, it's recommended that you refrain from spending or relying on your moving deduction money until you file taxes again and receive a clear return.

You may not have to eat the costs of moving if conditions are just right. The IRS can be difficult to work with, but they can also return plenty of your money to you in the form of qualifying business deductions. If you're planning to move soon for a new job, it might benefit you to read up on how your taxes might -- for once -- be a good thing.