Tax Deductible Moving Expenses

In my last post we went over the rules to be eligible for moving expenses, today I will go over what can and cannot be deducted. You can deduct the reasonable expenses of moving your household goods and personal property and traveling expenses. And sorry, meals are not deductible.

The traveling from your former home to your new home should use the shortest and most direct route available. For example, say I move to Ocala, I should use Interstate 75 North as my route, because it is the most direct. Any expenses including side trips, sightseeing, stop overs, or anything not related to the move are not deductible.

If you use your car to move, you can choose either actual expenses or the standard mileage rate, whichever gives you the best benefit. Actual expenses include gas and oil, and you must keep records of these expenses. The standard rate was 18 cents a mile in 2006 and will be 20 cents a mile for 2007. No matter which one you choose, you also deduct parking fees and tolls related to your move. You cannot deduct general repairs, insurance, depreciation, or anything else along those lines. If you deducted moving expenses in the last 3 years, take a look at your returns, and make sure you got the best benefit.

Deductible Moving Expenses: Here are the various moving expenses you can deduct. Make sure to keep accurate records, not only to ensure you get the maximum benefit, but also if the IRS wants proof.

The cost of packing, crating, and transporting your household goods and personal effects are deductible.

The cost of storing and insuring your household goods and personal effects are within any period of 30 consecutive days after things are moved from your home but before being delivered to your new home.

The costs associated with connecting or disconnecting utilities are deductible.

You can deduct the cost of shipping your car or pets to your new home. You can also deduct the cost for items you move from a place that is not your former home, but the cost cannot exceed that of shipping the items from your former home.

Also deductible are lodging and transportation expenses for you and members of your household while traveling from your former home to your new home.

Remember if your employer reimburses you for any of these expenses, then they are not deductible on your tax return.

Nondeductible Moving Expenses: This list is pretty self explanatory as to what does not qualify as an moving expense.

Any part of the purchase price of the new home

Car tags

Drivers license

Expenses buying or selling a home

Expenses breaking or getting a lease

Home improvements to help sell your home

Meals

Losses on the sale of your home

Temporary living expenses

Pre-move house hunting expenses

Real estate taxes

Security deposits

Storage charges that are not incurred during transit

Losses on the sale of your home.

Some of the above can be tax deductible elsewhere on your return, all depending on your specific tax situation. Consult a preparer or tax attorney to find out what is best for you.

Now you have a better understanding of moving expenses and what can and cannot be deducted.


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Tim Watson is a tax preparer during the season who also runs an SEO directory and an iPod directory. You may use this article as is provided the resource box stays intact.