California Income Tax Moving Expense Deduction

If you moved during the year due to business reasons and file California taxes, you may be entitled to a deduction on your next tax return. California is one of several states that let you claim moving deductions on both your federal tax return and your state return, giving you twice the benefit for the same expenses. To claim this deduction, you must file Form CA 540 with your California state tax return.

Your move must be related to a business purpose such as a new job, your current job relocating or moving your self-employed business to pursue new opportunities. The new location must be more than 50 miles away from your previous location. You must maintain full-time employment for at least 39 weeks during the first year after the move. If you are self-employed, you must work full-time for at least 78 weeks during the first two years after the move. You cannot claim a tax deduction if your employer reimbursed you for the total amount of your moving costs. If only part of your qualifying expenses are reimbursed, the amount that exceeds the reimbursement will still be deductible.

You can deduct moving-related expenses such as lodging, packing materials, shipping costs, parking, tolls and mileage. Your mileage costs must be based on the most efficient route between the two destinations. Only moving expenses incurred within one year of the date you began working at the new location can be deducted. Military members are exempt from the time and distance requirements.