@AveDog08
You need to very carefully read the section in publication 523 called “do I qualify for a partial exclusion?“.
https://www.irs.gov/pub/irs-pdf/p523.pdf
There is a general rule that allows you to claim a partial exclusion if you move due to an unforeseen financial hardship. There are also a small number of specific listed situations that will be accepted by the IRS as a reason that would allow an early sale to qualify for a partial exclusion. These are known as “safe harbors.” If you meet the circumstances of the safe harbor, your claim will be accepted, but if you don’t meet the safe harbor but can show an unforeseen financial hardship, you can still qualify for the partial exclusion.
The safe harbor for a job change, is a change in location of more than 50 miles (even if you don’t change employers.) Your new job location must be 50 miles farther from your house then your old job location. If your old location was your own home, but the new location is 45 miles from the home, then you don’t meet the safe harbor. A 45 mile change in job location might still qualify as an unforeseen financial hardship that makes it so difficult for you to afford the existing house that you were forced to sell. It depends on the individual facts and circumstances, and you must be able to show that it is not merely convenient for you to move closer to your job location, it must be a financial hardship for you to maintain the more distant home.
The financial hardship must also be unforeseen. For example, if you moved into your new home less than two years ago and you have been working from home due to the pandemic, it is probably not unforeseen that the pandemic restrictions would eventually be relaxed and you would be asked to work at the main workplace. However, if you were promised remote work and the company has now changed their mind for other reasons, that might be truly unforeseen circumstances.
If you believe you qualify for the partial exclusion, you don’t have to send any proof to the IRS when you file your tax return, just claim the partial exclusion on your tax return. However, you should save documentation for at least three years after you sell your home in case you are audited.
