The Internal Revenue Service allows you to deduct your qualified storage rental expenses as part of your moving costs deduction or business expenses deduction. To claim the moving cost deduction, your moving expenses, including storage costs, must exceed 2 percent your adjusted gross income. However, if you are a business owner or independent contractor, you may be able to deduct your qualified storage costs as a business expense without regard to the 2 percent adjusted gross income floor.
Moving Expenses
You can deduct your reasonable storage rental costs as qualified moving expenses if your move was work-related, you meet the geography or distance test and you meet the IRS's time test. Your move is work-related if you had to move because you started a business in a new area, you started a new job for a new employer or your employer required you to relocate. Additionally, you must satisfy the distance and time tests. If you meet all three tests, you can deduct the first 30 days of storage fees, and you may deduct your insurance premiums if you purchased insurance for your stored items.
Moving Distance Requirement
Your new place of business or home office must be at least 50 miles farther than the total mileage between your last job and your previous home. In other words, if your last job was 20 miles from your last office, your new home must be at least 70 miles away from your previous home.
Moving Time Requirement
Under the time test, you must work full time for at least 39 weeks in the first year that you move. If you are self-employed, you have another year to meet this requirement, but you must have worked at least 78 weeks in the first two years of your move. In other words, if you are self-employed, you must have worked at least 26 weeks or six months of the first year of your move (78 weeks minus 52 weeks).
Business Expenses
The IRS allows you to deduct your storage expenses if you incurred them as a necessary and ordinary part of your business activities. For instance, if you needed to rent a storage unit to keep records, you can deduct those storage costs, including insurance. If you work at home, and you take a home office deduction, you can also deduct your storage rental fees. If you store your items in a dedicated space in your home used only for business, you can deduct the space as a business expense. To deduct your home office and business expenses, including storage fees, you can use Schedule C to itemize your deductions.
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