Moving expense deduction?

To claim moving expenses, you must move from an established "tax home" to a new "tax home" and the distance differential between your old residence and old place of work to your new residence and new place of work must be 50 miles or more. You must also work at your new job for a set period. See IRS Publication for details. Staying at interim locations for less than a year does not necessarily establish a new "tax home."

Jim Hammond

What does that mean? Why does the old place of work matter at all?

Seth

The distance test for deducting moving expenses requires that your new job location be at least 50 miles farther from your former residence then your old job location. Example: You drive 5 miles to work from your home. You take a job that requires you to drive 45 miles from home. You fail the test because the new job is not at least 50 mile farther. It's only 40 miles more. Example: You drive 5 miles to work. You take a job that requires you to drive 60 miles to work. You pass the test because the job is at least 50 miles farther. It's 55 miles more.

There is a worksheet in IRS Pub 521 to perform this pretty simple calculation.

So if I used to drive 100 miles north (no traffic, took 1.5 hours), then took a new job that's 140 miles south (though a city, would take

If that test is passed, does it matter where the taxpayer moves?

Seth

Right, it doesn't count. You fail the 50 mile distance test. Distance is measured using the shortest of commonly traveled routes.

Location of the new home is not relevant for any of the tests to allow a deduction. It is quite possible to pass the distance test and relocate to a new home that increases your commuting distance.

See IRS Pub 521 for more details.

Your distance test algorithm is more strict than publication 521. By your algorithm, if you lived in San Francisco and lived one mile from your workplace, then move to New York where your new home is one mile from your new workplace, by your algorithm the distance differential is 1-1=0 and there are no moving expenses. But the rule is:

1. Enter the number of miles from your old home to your new workplace 1. miles
2. Enter the number of miles from your old home to your old workplace 2. miles
3. Subtract line 2 from line 1. If zero or less, enter -0- 3. miles
4. Is line 3 at least 50 miles? ? Yes. You meet this test. ? No. You do not meet this test. You cannot deduct your moving expenses.

So the move from San Francisco to New York would meet the distance test as line 1 would be 5000 or more, line 2 would be 1, and of course line 3 >= 50.

Regarding working at your new home for a set period, that's true, but they are a bit generous. For example, if you get laid off then that counts towards the 39 week period. I once asked a question on this newsgroup that if both spouses work half-time after the move, does that still allow them to deduct moving expenses (because if one of them worked full time and the other not at all, then they would be able to claim moving expenses).

I think they want you to not be able to deduct moving expenses when you quit one company and start working for another company that's close by, like you quit your job in San Francisco and take on another job in San Francisco or the vicinity of it.

"New home must be 50 miles close to new job than old home was" would handle that better, I think.

Seth

I think you have missed the point. Location of your new home has no relevance to whether you can deduct moving expenses. The only thing that matters is whether when you depart from your old residence and travel by the shortest distance of the more common routes to the new job, the distance is at least 50 miles greater than your commute to your old job. If it is, you pass the test. If it is not, you fail the test.

No one cares where your new home is located. If you pass, the IRS does not care if you move to a new home that increases your commute or decreases your commute, or is 50 miles farther or 50 miles shorter to your new home.

I suggest that you review table 1 in Publication 521. It seems you've mixed up how the distance test works.

It is difference of:

- Distance from Old Home to Old Place of Work

- Distance from Old Home to New Place of Work

Given what has been provided, I believe that the distance test has been met.

Rather, I think the Tax Code misses the point. Moving to be (enough) closer to your (new) workplace is what should be deductible. I realize that "should be" has little or nothing to do with the tax laws.

Seth

What the tax code says IS the point. To the extent you think it's wrong, call your senator and complain.

Actually, there is another, separate test for deducting moving expenses that *does* take into account your new home location. This is the test that requires the move be related closely in time and place to the new job.

Specifically, if your move takes you further away from your new job than your old home was (i.e. you moved in the opposite direction, away from new your job, instead of closer), then you fail this test and cannot deduct the expenses, with two exceptions.

From the pub:

"Closely related in place. You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location is not more than the distance from your former home to the new job location. If your move does not meet this requirement, you may still be able to deduct moving expenses if you can show that: · You are required to live at your new home as a condition of your employment, or · You will spend less time or money commuting from your new home to your new job location."