Tax Deductible Moving Expenses: What You Need to Know

Moving can be a stressful and expensive process, but you may be able to reduce the financial burden by taking advantage of tax deductions. In this article, we'll discuss what kind of moving expenses are tax deductible and how to claim them. You may be able to deduct your moving expenses, your family's and belongings, moving company professional services, do-it-yourself moving trucks or pods, gasoline and oil or standard moving mileage rate, if you're traveling by car, packing supplies (blankets, duct tape, boxes), and moving insurance. This deduction is available if your move is work-related and passes the time and distance tests.

Moving expenses are considered income adjustments, so you can deduct them even if you don't itemize your deductions. Active-duty military officers may be able to deduct their moving expenses from their federal income taxes. If you are employed or self-employed in a new location, you may qualify for a moving tax deduction. You can also deduct your moving expenses if you have a special circumstance and the move occurs some time after your first day of work.

For active-duty military members moving to a permanent station outside the U. S., all of the above expenses are deductible, plus the cost of storing household items and personal property for the entire time you are in your new location. Prior to the Tax Cuts and Jobs Act (TCJA), qualified moving expenses were considered a deduction above the line to reduce a person's taxable income. This meant that you didn't have to itemize deductions on your federal tax return; you could recover the costs of moving for work or look for a new job and still accept the standard deduction.

To meet this standard, you'll need to start your new job and work full time for at least 39 weeks within the first 12 months after your move. Organizations' reimbursements to their employees for moving expenses are considered taxable earned income and must be reported as such. Members of the military and family members use Form 3903, Moving Expenses to report their moving expenses and deduct them as an adjustment to income on Form 1040. Reasonable expenses that can be claimed include the use of rental trucks, mileage or gasoline costs, insurance, packaging and temporary storage.

If you need a car in order to get around in your new location, this expense may also be deductible. To calculate a deduction for moving expenses, use Form 3903 and follow the instructions to record it on your income tax return, Form 1040. The TCJA also lowered tax rates and doubled the standard deduction. To deduct allowable expenses for a move outside of the United States, you must be a citizen of the United States or a resident alien who is moving to the area of a new workplace outside of the United States or their possessions.

You may still be able to take a state tax deduction for moving expenses; research the rules where you live to find out if your state gives you a tax exemption due to incurring moving expenses. At this time, the moving expense deduction and the moving expense reimbursement exclusion are scheduled to return starting in January. If you're planning a move soon, make sure to take advantage of any tax deductions available to help reduce your financial burden. ARC can help make your move easier with our relocation services.