Moving home can be a really stressful time, and if you’re starting from scratch it can be a fairly expensive time too.
So it’s understandable that you’re looking into seeing whether or not you can deduct the tax from your moving expenses.
However, as much as I hate to be the bearer of some bad news, ever since the 2017 tax cuts, moving expenses have stopped being tax-deductible.
There are a few instances where you still might be able to claim, for example, if you currently serve in the military or to claim on a move that was prior to 2017 as an amended file.
If you don’t fit either of these circumstances it’s likely that you won’t be able to get a deduction.
But I would still suggest keeping track of your deductions as some states will allow a deduction given you meet particular criteria, and even if you don’t end up getting it, it can help you keep track of your expenditure which is always helpful.
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Moving Expenses Defined
So first of all, you may be wondering what even counts as a moving expense. When you come to planning your move, moving expenses will count as anything that is both reasonable and necessary for your move.
So say you get hungry during the move and order food, you can’t claim that as part of your expenses because it’s not really necessary to help you move.
The gas you’ll put in your car to bring your belongings from one house to the other, now that is reasonable and essential and so that would count.
Reasonable moving expenses:
- Gas/Mileage on your vehicle
- Short-term storage
- Rental trucks
- Insurance
- Packing
If you are traveling long distances for your move, the expense of a hotel may classify as moving expenses but the food you’d eat throughout the trip would not.
The IRS has a mileage reimbursement rate of 17 cents per mile. You can utilize this rate to calculate the exact value of your travel expenses.
If you’d rather, you could always keep track of all your transportation expenditures and instead deduct those, which would include your gas, oil, tolls, and any parking fees.
Are Moving Expenses Tax Deductible
If you moved into your new home prior to 2017 and didn’t claim the deduction at the time, it is possible for you to file an amended tax return to deduct your expenses.
If you are currently on active duty with the military then you will also be able to claim moving expenses.
In order to be eligible for the tax deduction as part of the Armed Forces, the reason for your move has to be a direct result of an order from the military.
If this is the case you will be able to claim expenses for not only yourself, but for your spouse and any dependants too.
You will not be able to deduct any expenses that have been paid for or reimbursed by the government. In addition, you’ll also need to meet the requirements of meeting the time and distance tests.
The Time Test
When you move home must correlate to the beginning of your new job in order to be entitled to a deduction.
So what does that mean? Well, you’ll need to start at your new place of employment and work full-time for a minimum of 39 of the 52 weeks of the year.
There are exceptions available for certain circumstances, for example, you may start your job before the whole family moves due to receiving medical care.
Or perhaps your child is finishing the school year in the old home before starting afresh. In cases such as these, you should still be able to deduct your expenses.
The Distance Test
It is also requirements based on how far away you’re moving. To claim, your new job must be a minimum of 50 miles farther away from your old house than your previous job.
So what does this mean? Say your previous job was 10 miles away from your home, to qualify for the tax deduction you’ll need to start a new job that is a minimum of 60 miles away from your previous house.
Keep in mind that if you serve in the military, you are not required to meet these criteria if you are making a permanent modification to your military status(termination of service or retirement)
Do Military Filers Use Form 3903?
Yes, those serving in the military should use the 3903 to report any of the following expenses:
- Storage and shipping costs related to moving and packing.
- Any travel, lodging, or gas.
- Reimbursements from your employer for moving expenses.
The amount that you report in line 4 of your 3903 should correspond with box 12, code P of your W-2 form.
If your repayment surpasses your total out-of-pocket expenses, it won’t be possible to deduct your moving expenses. Instead, you’d need to claim the excess repayment as taxable income.
However, if your expenses exceed what was reimbursed to you by your employer then you’ll be able to deduct your out-of-pocket moving expenses to decrease your taxable income.
Final Thoughts
Moving can seem like a real hassle at times, especially if you’re traveling far. And all that money can add up, so it is important to learn when you are and aren’t eligible for a tax reduction. Every little bit helps after all.
However, due to the change in tax laws unless you’re active military it is unlikely that you’ll be able to claim back your moving expenses if you plan on moving anytime soon.
If you did manage to move before the change was made (pre-2017) then you may be eligible to claim back some tax for your move through an amended file.
Whether or not you have been able to deduct some or all of your moving expenses, I wish you all the best in your new home!
