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Can long distance moving expenses for self employed individual be deducted as a business expense as opposed to a component of Schedule A?

My wife is a self employed speech therapist, we moved last year out of state for better business opportunities. Are the costs associated with the move deductible as a business expense? If so, would it be a misc expense?

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Intuit Alumni

Can long distance moving expenses for self employed individual be deducted as a business expense as opposed to a component of Schedule A?

You could report those expenses as moving expenses if you meet the requirements.

Moving expenses are not reported on Schedule A, rather they are adjustments that lower your Adjusted Gross Income.

It would have a similar effect on your income (as being reported on Schedule C), although it would be applied to all your income, not just self-employed, and it would not reduce your self-employment tax.

The requirements are slightly different for a self-employed taxpayer.

Time Test for Self-Employed Persons

If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you arrive in the general area of your new job location (78-week test). For purposes of the time test for self-employed persons, the following three rules apply.

You count any full-time work you do either as an employee or as a self-employed person.

You don't have to work for the same employer or be self-employed in the same trade or business for the 78 weeks.

You must work within the same general commuting area for all 78 weeks.

Example. You are a self-employed accountant who moves from Atlanta to New York City, and begin to work there on December 1, 2016. You pay moving expenses in 2016 and 2017 in connection with this move. On April 15, 2017, when you file your income tax return for the year 2016, you have been performing services as a self-employed individual on a full-time basis in New York City for approximately 20 weeks. Although you haven't satisfied the 78-week employment condition at this time, you can deduct your 2016 moving expenses on your 2016 income tax return as there is still sufficient time remaining before December 1, 2018, to satisfy such condition. You can deduct any moving expenses you pay in 2017 on your 2017 income tax return even if you haven't met the 78-week test. You have until December 1, 2018, to satisfy this requirement.

Self-employment. You are self-employed if you work as the sole owner of an unincorporated business or as a partner in a partnership carrying on a business. You aren't considered self-employed if you are semi-retired, are a part-time student, or work only a few hours each week.

For more detailed information, please click on the link below.

CLICK HERE for Moving Expenses

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