Taxpayer asks:
Quick Q: I’m leaving my full-time job 2 start grad school. Moving 300 miles. R moving expenses deductible under IRS 455
Taxgirl says:
My answer on twitter: Not for grad school. Just for jobs. Grad school may feel like it’s a job but the IRS doesn’t think so. 😉
And now the extended version: If you move for work-related reasons, you may be able to deduct your moving expenses. To qualify, you have to meet three criteria:
- The move must be “closely related” to the start of a new job for your trade or business. As a general rule, a move that happens within a year of your reporting to your new job would qualify as timely for purposes of the deduction (some exceptions apply).
- The move meets the distance test. If your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home, you meet the test. As an example, I live about a mile from my office. To qualify for moving expenses, my new job would have to be at least 51 miles away from my old home. And yes, since I know you’re wondering, you would use the shortest commonly traveled distance between the two points – you can’t drive around the beltway three times and count those miles.
- The move meets the time test. The rules for this one are different, depending on whether you are an employee or if you are self-employed. If you are an employee, you must work full time as an employee for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location. The work doesn’t have to be for the same employer, nor must the 39 weeks be consecutive. If you are self-employed, the rules are a bit more tricky. Not only do you have to meet the 39-week test, you have to double it: you must work full time for at least 78 weeks during the first 24 months after you arrive at your new location. You are considered self-employed if you work as the sole owner of an unincorporated business or as a partner in a partnership carrying on a business.
The IRS doesn’t consider going to school a job, so moving for your education won’t qualify. Additionally, for purposes of calculating moving expenses, you are not considered self-employed if you are semi-retired or if you are a part-time student.
Of course, these are the general rules. Exceptions may apply, depending on your individual circumstances so check with your tax professional for more information. The most common exception is for members of the Armed Forces who move because of a permanent change of station.
If you qualify under the rules above, you can deduct the reasonable expenses of moving your stuff (household goods, clothes, furniture, etc) and yourself (meaning travel, which includes lodging but not meals). You can’t deduct the cost of selling your home (not as a moving expense, anyway), the cost of your new home, expenses to find a new home, or storage charges (unless they happen en route to your new home). You would report your expenses using a federal form 3903 (downloads as a pdf). Ooh, and the best part? You don’t have to itemize to take the deduction.
(Note: Moving expenses have largely been eliminated following the TCJA.)
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
Do you have to demonstrate that the employment was the cause of the move? If you move to be closer to family, but work F/T for at least 39 of the first 52 weeks after your move, can you take the deduction? In the original asker’s case, if he works (F/T probably being the deal-breaker here, but assuming it is F/T for the sake of argument) the required amount, say as a research or teaching assistant, would that then qualify?