Certified Relocation Professional (CRP) Practice Exam

What is a requirement for an employee to qualify for a tax deduction on moving expenses?

1. Moving must meet the requirements of Section 217 of the tax code

2. The company must refund all moving-related expenses regardless

3. The employee must not have any prior moving deductions

4. The employee must itemize deductions on their tax return

The correct answer is: Moving must meet the requirements of Section 217 of the tax code

To qualify for a tax deduction on moving expenses, the moving costs must meet the specific criteria outlined in Section 217 of the Internal Revenue Code. This section stipulates that the move should be closely related to the start of work at a new job location and that the distance from the old home to the new job must exceed the distance from the old home to the old job by at least 50 miles. Additionally, the rationale for moving must be primarily job-related, and the employee must meet certain time and distance tests related to their employment. Other options do not provide valid requirements for tax deductions on moving expenses. For instance, the idea that a company must refund all moving-related expenses is inaccurate as employees can qualify for deductions even without full reimbursement. Prior moving deductions do not disqualify an employee from claiming new deductions. Lastly, while itemizing deductions could impact the ability to claim moving expenses, it is not a strict requirement for eligibility as some tax situations might allow for different treatment.