Understanding Moving Expenses
When you’re moving to a new city or state for a job, the costs can add up quickly. Knowing what qualifies as a moving expense is the first step to managing your budget and understanding potential tax benefits. Generally, qualified moving expenses include the cost of transporting your household goods and personal belongings, travel costs for yourself and family members, and storage fees for up to 30 days if needed during the move. Typical expenses might cover hiring movers or renting a moving truck, packing materials, shipping your car, gas or airfare to your new home, and lodging along the way (but not meals). It’s important to keep detailed receipts and documentation for all these costs, as you may need them for reimbursement from your employer or for tax purposes. By staying organized and knowing what counts as a legitimate moving expense, you can make smarter choices during your relocation and potentially save money come tax season.
Qualifications for Deducting Moving Expenses
If you’ve recently relocated for a new job or job transfer, you might be wondering if your moving expenses can help you save on your taxes. The IRS has set specific guidelines on who can claim moving expense deductions, and it’s important to understand the qualifications before you file.
Who Can Deduct Moving Expenses?
Currently, the IRS only allows active duty members of the Armed Forces who move due to a military order to deduct moving expenses on their federal tax returns. For most other taxpayers, the deduction was suspended starting in 2018 due to changes from the Tax Cuts and Jobs Act and is scheduled to remain unavailable through at least 2025. However, if you are military or are filing an amended return for a tax year before 2018, these rules may still apply to you.
The Two Key IRS Tests
Before the suspension (and still applicable for eligible filers), there were two main requirements for deducting moving expenses: the Distance Test and the Time Test.
| Test | Requirement |
|---|---|
| Distance Test | Your new workplace must be at least 50 miles farther from your old home than your previous workplace was. |
| Time Test | You must work full-time for at least 39 weeks during the first 12 months after your move (or 78 weeks in 24 months if self-employed). |
Employment Condition Details
The job-related move must occur in connection with starting work at a new location. You dont have to have a job before you move, but you do need to begin work shortly after relocating. Exceptions may apply for military families, those transferred by an employer, or people unable to meet the time test due to death, disability, or involuntary separation.
Special Note for Military Members
If you are an active duty member of the U.S. Armed Forces moving due to a military order and permanent change of station, you can still deduct qualified unreimbursed moving expenses. This includes moves within the United States and abroad.
Understanding these qualifications is key before claiming any deductions for moving expenses. In the next section, we’ll dive into what types of expenses actually qualify under these rules.
3. Changes in Moving Expense Deductions
If you’ve recently relocated for a new job or a job transfer, it’s important to know that the rules for moving expense deductions have changed significantly in the past few years. The Tax Cuts and Jobs Act (TCJA), which went into effect starting in 2018, made some big adjustments that could impact your tax planning.
Before the TCJA, many taxpayers could deduct qualified moving expenses from their federal income taxes if they met certain distance and time requirements. This included things like hiring movers, renting a truck, or even storage fees—expenses families commonly encounter during a move for work. However, under current law, these deductions are much more limited.
How the Tax Cuts and Jobs Act Changed Things
The TCJA suspended the deduction for moving expenses for most taxpayers through at least 2025. Now, only active-duty members of the Armed Forces who move due to a military order can claim this deduction. If you’re not military, you generally won’t be able to deduct your moving costs on your federal taxes, even if your move was entirely job-related.
Who Is Still Eligible?
This change means that most employees and families who relocate for work cannot write off moving expenses like they used to. For military families, though, the old rules still apply as long as the move is due to a permanent change of station. It’s always good to double-check your eligibility before filing your taxes, especially as tax laws can evolve over time.
State Taxes May Differ
It’s also worth noting that some states may still allow moving expense deductions on your state tax return, even if they’re disallowed federally. Check with your state’s tax authority or consult with a tax professional to see how your move impacts both your federal and state returns.
4. Credits and Benefits for Military Personnel
When it comes to moving expenses, active-duty members of the U.S. Armed Forces have unique rules and potential tax benefits, especially when relocating due to a Permanent Change of Station (PCS). Unlike most civilians, who generally cannot deduct moving costs after the 2018 tax law changes, service members may still qualify for valuable deductions and credits. Below, we break down the details you need to know if you or your family are moving because of military orders.
Who Qualifies for Military Moving Expense Deductions?
If you are an active-duty member of the Army, Navy, Air Force, Marine Corps, or Coast Guard and your move is ordered by a PCS—including moves between duty stations, from home to your first post, or from your last post back home—you’re eligible. This also applies to certain moves related to retirement or separation from service.
What Expenses Can Be Deducted?
The IRS allows qualified military personnel to deduct reasonable unreimbursed moving expenses. Here’s a quick look at what can and cannot be deducted:
| Deductible Expenses | Non-Deductible Expenses |
|---|---|
| Transportation & storage of household goods | Meal costs during the move |
| Travel (including lodging) from old to new home | Temporary living expenses |
| Packing/unpacking services | Home improvements for sale/rent |
| Shipping pets (if not reimbursed) | Vehicle registration fees |
How to Claim the Deduction?
Military personnel claim these deductions using IRS Form 3903 (“Moving Expenses”) when filing their federal tax return. It’s important to keep all receipts and records related to your move in case of audit.
Additional Benefits for Military Families
Apart from deductions, some states offer extra benefits such as state income tax exemptions or reimbursement programs for military families facing relocation. Check with your state’s Department of Revenue or military assistance office for local perks that could save you even more.
Summary Table: Key Points for Military Moves
| Benefit/Rule | Description |
|---|---|
| Federal Tax Deduction | Available for unreimbursed moving expenses due to PCS orders. |
| No Time/Distance Test Required | Unlike civilians, military do not need to meet minimum distance or time requirements. |
| State-Specific Benefits | Some states offer additional tax relief or reimbursements. |
| Form Required | IRS Form 3903 must be filed with your tax return. |
If you’re preparing for a PCS move, take advantage of these specialized tax benefits and resources—it can make a significant difference in your family budget!
5. State-Specific Moving Expense Rules
Even though the federal moving expense deduction is currently suspended for most taxpayers (except active-duty military members), it’s important to know that some states still allow you to claim moving expenses on your state income tax return. State tax laws can be very different from federal rules, and in some cases, more generous when it comes to job-related relocation. For example, if you move for a new job or a transfer within the same company, certain states may let you deduct reasonable moving costs—even if you can’t do so on your federal return.
States like California, New York, and Pennsylvania have their own rules about what counts as a deductible moving expense. These might include transportation of household goods, storage, and travel costs for you and your family. The criteria for qualifying moves also differ by state; some require a minimum distance between your old and new workplace or a minimum length of employment after the move. Be sure to check your state’s Department of Revenue website or consult with a local tax professional who understands the ins and outs of your area’s tax code.
If you’re planning a move or recently relocated due to work, don’t automatically assume you’ve lost out on all possible tax benefits. Review your state’s tax forms and instructions carefully—some states even offer specific credits in addition to deductions for relocation expenses. Filing correctly could put extra money back in your pocket at tax time!
6. Tips for Claiming Moving Expenses
Keep Detailed Records
One of the most important steps in claiming moving expenses is to maintain thorough and organized records. Save all receipts related to your move, including transportation, packing materials, storage fees, and mileage logs if you drove your own vehicle. Having a dedicated folder (digital or physical) for these documents makes tax time much easier and helps you back up your claims if the IRS ever asks for proof.
Understand Eligible Expenses
Familiarize yourself with what counts as a deductible moving expense under current IRS rules. Generally, this includes the cost of transporting your household goods and personal items, travel to your new home (excluding meals), and certain storage costs. Expenses like home-finding trips, meals on the road, or temporary housing are typically not deductible, so don’t include them in your claim.
Use the Correct Tax Forms
If you’re an active-duty member of the Armed Forces who moved due to a military order, use Form 3903 (“Moving Expenses”) to report your deductions on your federal tax return. For most other taxpayers, moving expenses are no longer deductible at the federal level after the 2017 tax reform—so be sure to check state-specific rules if you’re eligible for state deductions or credits.
Double-Check State Tax Laws
Some states still allow moving expense deductions even though they’re not available federally. Check with your state’s Department of Revenue or consult a tax professional to see if you qualify for any state-level credits or deductions related to your job-related relocation.
Maximize Your Tax Benefits
If you qualify for moving expense deductions, make sure you claim every eligible expense. This could mean tracking mileage carefully or ensuring you include all allowable shipping and storage costs. If your employer provided reimbursement for some moving expenses, only deduct those out-of-pocket costs that were not reimbursed or included as taxable income by your employer.
Consult a Tax Professional
The rules around moving expenses can be complicated, especially with changes in recent years. When in doubt, seek guidance from a CPA or tax preparer familiar with relocation issues. They can help ensure you don’t miss out on valuable deductions or make costly mistakes when filing your taxes after a big move.
