One of the nice things about the moving expense deduction is that you can take it even if you do not have enough other deductions to itemize as this is not considered an itemized deduction, but rather an adjustment to your taxable income. As such, your adjusted gross income is reduced and this reduced adjusted gross income also reduces your state tax liability as well as the federal tax liability. If you moved to a new home because of a new principal workplace, you may be able deduct your moving expenses whether you are self-employed or an employee. In order to qualify for this deduction you must meet both a distance and a time test.

If you are a married couple only one spouse must meet the time and distance test. In addition, your move must be closely related both in time and place, to the start of work at your new job location.

To pass the distance test your new principal workplace must be at least 50 miles farther from your old home than your old workplace was. For example, if you old workplace was 7 miles from your old home, your new workplace must be at least 57 miles from that home.

If you did not have an old workplace, your new workplace must be at least 50 miles from your old home.

The distance between the two points is the shortest of the more commonly traveled routes between the two locations. To pass the time test you must work full time in the general area of your new workplace for at least 39 weeks during the 12 months after your move if you are an employee.

If you are self-employed, you must work full time in the general area of your new workplace for at least 39 weeks during the first 12 months and a total of at least 78 weeks during the 24 months right after you have moved. There are specific IRS exemptions to this time test that are beyond the scope of this article but that in extenuating circumstances you may qualify for.

So once you have determined that you have met the distance test and the time test it is important that you track all expenses and maintain appropriate documentation and receipts in the event of a future audit. To claim the deduction you must complete IRS Form 3903 which is a schedule that is incorporated into your form 1040 return. The total allowable moving expenses from form 3903 are subsequently reported on IRS Form 1040 on line 26.

If your employer reimburses you for some or all of the moving expenses it is important that you do not get greedy and try to double dip. You are not allowed to deduct moving expenses that are reimbursed by your employer. How you treat this reimbursement from your employer is determined in large part in how your employer is reporting it, but in either case it is important to make sure that you are not double counting and that you also are fully taking advantage of the tax advantage you are qualified for.

So when you move, make sure that you save any and all receipts and documentation. No one wants to pay more taxes than necessary, but it takes some planning and organization to minimize your taxes and to take advantage of these deductions that are built into the tax code and that you are entitled to.