How Far Must a Relo Be For Employees to Deduct Moving Expenses

Issue: An employee lives approximately 15 miles from his employer’s offices. The employer is moving its offices to a suburban location on the opposite side of the city. How far do the new offices have to be from the employee’s present residence for a move to a new residence to be allowed as a deduction?

Answer: The new offices have to be at least 65 miles from the employee’s present residence in order to qualify for a deduction for moving to a new residence. According to what is commonly called the “50-mile test,” the distance between the employer’s new principal place of work or business and former residence must be 50 miles greater than the distance between the employee’s former primary place of business and former residence. In other words, the commuting distance must have increased by at least 50 miles.

Distances must be computed on the basis of the shortest of the more commonly traveled routes between the two points. If an employee had no former principal place of business, the new place of work or business must be at least 50 miles from the former residence. Following is a list of common relocation expenses and whether or not they qualify for a deduction:

Nondeductible expenses:

• expenses for meals
• pre-move house-hunting trips
• expenses incurred during a stay in temporary quarters for up to 30 days in the general location of the new job
• the costs of selling an old residence and buying a new residence

Deductible expenses:

• moving household goods and personal effects from employee’s former residence to new residence
• storing and insuring household goods and personal effects (this must occur within 30 days after the day the goods are moved from the former residence)
• travel from the former residence to the new place of residence. A deduction is allowed for one trip only.

Note that for the above expenses to qualify for deduction, they must be reasonable, and the move must bear a reasonable proximity both in time and place to the commencement of work.

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