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Moving Expense Reimbursement as an Employee Benefit

When certain requirements are met, you may be able to exclude the value of any employer-provided, qualified moving expense reimbursements from your gross income (exceptions apply to members of the armed forces). A qualified moving expense reimbursement is any amount that you receive from your employer as payment for or reimbursement of expenses that would have been deductible as moving expenses if you had directly paid or incurred them.

Deductible moving expenses include the moving of household goods and personal effects from the former home to the new home, and traveling from the former home to the new home. Deductible moving expenses do not include expenses you incur selling, buying, or looking for a home.

The following requirements must be met in order for your moving expenses to be deductible (or qualify for the exclusion from income if reimbursed by your employer):

You must incur the expenses in connection with the start of work at a new principal place of employment.
The distance between your new principal place of employment and your former residence must be at least 50 miles greater than the distance from your former place of employment to your former residence. If you go to work full time for the first time, your place of work must be at least 50 miles from your former home to meet the distance test. If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work must also be at least 50 miles from your former home.
You are a full-time employee in the general location of your new place of employment for at least 39 weeks of the 12-month period immediately following your arrival at your new location. If you are self-employed, you must be employed or performing services at the new location for at least 78 weeks out of 24 months immediately following the move and at least 39 weeks of the first 12 months after the move.

NOTES: (1) Your employer can reimburse you either directly or indirectly for qualified moving expenses. (2) If your employer does not reimburse you for qualified moving expenses, you can claim them as a deduction on your individual tax return. (3) You can still deduct your moving expenses even if you have not yet met the 39-week or 78-week time test by the date your tax return is due, as long as you expect to meet the time test in the following tax year. (4) If you are reimbursed by your employer for your expenses, you can exclude the reimbursement from income, but you cannot deduct your otherwise deductible moving expenses (to the extent that they were reimbursed). (5) While there is no dollar limit on the moving expense deduction, the expenses must be "reasonable".