Whether the move is for another job within your company, the same job in a different location, a new job, or even their first job, as long as they meet the IRS requirements, they can shave off a few bucks at tax time.

The first requirement an employees has to meet is distance.

Most relocating employees meet the distance requirement easily. Simply put, your new job or workplace must be at least 50 miles farther from your former home than your old job location was from your former home.  The 50 mile rule is just the IRS's way of making sure the tax deduction is not taken just because they found a new place to live that cuts a couple of miles off their usual commute. Since most employee relocations are at least 100 miles or more from the old location, this requirement isn't usually a problem.

The second test they need to meet is the time requirement.

The employee must work full-time for at least 39 weeks in the first 12 months after their move. Again, this is Uncle Sam's way of making sure no one is getting a tax break just for moving to a more desirable location.

Once these two requirements are met, the employee can deduct the costs of moving their household goods, (including transporting their car and and pets), storing their belongings for the first 30 days, and the expenses for the final move of the employee and their family.  This includes airfare or mileage, nights in transit and one night of lodging in old and new locations.  Meals are not included.

Another deduction your employee can take is for discount points on their new mortgage.  Whether or not your employee paid them, or the seller paid them on your employee's behalf, they are deductible.

A few other things employees need to remember about deducting relocation expenses: 

- Employees should keep their receipts!  They will have to use the long form 1040 to claim moving costs even if they don't itemize any other deductions.

- If your employee is married and files jointly, only one spouse needs to meet the time and distance tests. However, if the employee and spouse are both employed in the new location, they cannot combine the weeks the spouse worked with the weeks they worked to satisfy the time component.

- If the employee is reimbursed by your company for some or all of their transfer or moving costs, they cannot deduct those expenses.

For some additional tips follow this link  to the Worldwide ERC blog  

To find out more about taxable and non-taxable employee relocation expenses, contact a qualified tax professional, or give us a call at 1- 800-598-8887.