The time of your move must be closely related to the start of your new job in order to be eligible for the tax deduction. To meet this standard, you'll have to start your new job and work full time for at least 39 weeks within the first 12 months after the move. Moving expenses are an adjustment to your income, but not an itemized deduction. Moving expenses reduce your adjusted gross income, so they can help you qualify for other tax benefits that have limitations on other income levels.
If this is your first time moving, moving costs can be confusing. The standard mileage rate, calculated by the IRS, is 17 cents per mile and can be used to calculate any travel expense. If you prefer, you can deduct your actual transportation costs if you keep up with your expenses. The travel expenses for relocation that you can use are the costs of gas, oil, tolls, or parking fees.
All military personnel must use Form 3903 to describe their relocation expenses, such as shipping and storage costs, travel, hotel stays, and gas costs. All reimbursements made by the employer will be recorded on line 4 and reimbursements for expenses on the first and second lines that are not included in the first box of Form W2 must be on the fourth line. If you have your W2 handy to verify it, what you indicate in the fourth line should appear in box 12 (code P). These specific instructions are also included in Form 3903.If the amount that will be reimbursed exceeds all of your out-of-pocket expenses, you will not be able to deduct your relocation expenses, but you will have to request the additional reimbursement as a taxable base.
If your personal expenses exceed the amount reimbursed by your employer, you can deduct your out-of-pocket moving expenses as taxable income. If you are self-employed, you must work 78 weeks in total for the first 24 months after arriving in your new area, while still working a minimum of 39 weeks for the first 12 months. If you are married, only you or your spouse must meet the time test.