Texas Income Tax

• Initially, it may be disappointing to learn that Texas doesn't allow you to claim a deduction for your moving expenses. However, the reason is because Texas doesn't impose an income tax on its residents, and therefore, doesn't require the filing of an income tax return. Remember, the best way to save money in income tax is to not have to pay it at all.
  
  

IRS Moving Expenses

• The IRS allows you to deduct your moving expenses provided the reason for your move is to start a new job or to begin looking for one in the new location. To qualify, you must satisfy the time and distance tests, and if you do, you can deduct the cost of hiring movers or renting a truck to transport your personal effects to the new home. The deduction also covers the expenses you incur to transport your family to the new area. If you must move out of your former home before the new one is ready, you can deduct up to 30 days of storage rental fees for your household items. In order to properly claim the deduction, you must prepare a Form 3903 and attach it to your 1040.
  
  

Time Test Requirements

• To insure that taxpayers only deduct moving expenses that relate to a new job, the IRS requires that you work full-time for at least 39 weeks during the first 12-month period you are in the new location. Given the requirements of this test, it is perfectly acceptable to claim the deduction even if your intent is to find a position after settling into your new home. However, this only provides you with 13 weeks to secure a job and begin working after you move. In the event you relocate at the end of the tax year in which you claim the deduction, but determine in the next tax year that you can't satisfy the time test, the IRS expects you to either amend your return to eliminate the deduction or to increase your taxable income by the amount of the moving expense deduction in the current year.
  
  

Distance Test Requirements

• The purpose of the distance test is to insure that your move is not a local one, which the IRS assumes would not require you to change jobs since you are still within commuting distance. To satisfy the distance test, your new job location must be 50 miles farther from your former home than your prior job is from that same home. As a result, there is no requirement that you move outside of Texas as long as the distance test is met.