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Deducting moving expenses, part 2: what can I deduct?

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Now that you know whether you qualify to deduct moving expenses, you need to know what you can deduct. You can deduct (a) reasonable costs of moving your household goods and personal effects and (b) reasonable costs of your travel to the new location.

Item (a) is pretty straightforward – you can deduct what you spend to pack and ship household items and personal goods from the old location to the new location, as long as those costs are what the IRS would consider reasonable e.g. not in excess of market rates. You can also deduct the costs of storage and insurance of your household items and personal goods for any period of 30 consecutive days from the time they leave your old residence to the time they are delivered to your new residence, as well as any in-transit storage costs. Finally, you can deduct any costs of connecting or disconnecting utilities that are required solely because you are moving personal effects – if you have a gas dryer, for example, and you need to have the gas company do a disconnect on one end and a connect on the other, you can deduct those costs.

Item (b) is a little different – you can only deduct the cost of transportation and lodging enroute for you and the members of your household. You cannot deduct meals and entertainment, nor can you deduct the costs related to any personal side trips you might make – if you stop and visit Grandma enroute, for example, you cannot deduct the lodging related to that portion of the trip. You can deduct one day’s worth of lodging costs in your old location if you could not stay in your house because your furniture had been moved, and you can deduct lodging costs for the day that you arrive in your new location, if you have any.

If you drive your own vehicle, you can deduct the actual costs you accrued on the trip for gas and oil, as long as you keep a record of those costs, or you can deduct 24 cents per mile (for 2009) – keeping in mind that if you detour off the most direct route between the two locations for personal reasons, the costs related to that portion of the trip are not deductable. You do not have to travel at the same time as the other members of your household. However, you can only claim the expenses for one trip per household member. (By the way, a member of your household can be anyone who lives with you at both the old location and the new address.)

You cannot deduct the costs of trips made for househunting purposes before you have moved, nor can you deduct the costs of selling your old home, buying a new home, or any improvements that you needed to make to your old home in order to sell it. Nor can you deduct the costs of breaking a lease or lost security deposits if you are renting in the old location. You also cannot deduct the cost of return trips to the old location.

Sometimes, in order to convince you to move, your new employer might offer to reimburse you for some or all of your expenses in moving. We’ll cover that next.


Written by nctaxpro

February 15, 2010 at 9:02 pm

3 Responses

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  1. […] what you can and cannot deduct. […]

  2. […] a comment » Part 1 – can expenses be deducted Part 2 – what expenses can be deducted Part 3 – handling employer […]

  3. […] expenses. I wrote about this last year, so you can read Part 1, Part 2, Part 3, and Part 4 for […]

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