Are Moving Expenses Tax Deductible for Retirees?
Learn whether retirees can deduct moving expenses, which costs qualify, and how to properly document and report them for potential tax benefits.
Relocating in retirement can be a major financial decision, and many retirees wonder if they can deduct moving expenses on their taxes. Tax laws have changed in recent years, making it essential to understand current IRS rules.
While moving expense deductions were once more widely available, recent tax reforms have limited eligibility. Determining whether retirees qualify requires careful review of current regulations.
Eligibility Criteria and Age Factors
The Tax Cuts and Jobs Act (TCJA) of 2017 significantly restricted moving expense deductions. Currently, only active-duty U.S. Armed Forces members moving due to a military order can claim this deduction. Most retirees, regardless of age, do not qualify for a federal tax deduction.
Some states still allow moving expense deductions under their tax codes. Massachusetts and New York, for example, permit certain taxpayers to claim these deductions on state returns. Retirees should check the tax laws in both their current and future states to see if any state-level benefits apply.
Age does not impact eligibility for moving expense deductions under federal law. Unlike tax benefits such as the additional standard deduction for those 65 and older, moving expense deductions are tied strictly to employment-related relocations. Moving for health reasons, to be closer to family, or to lower living costs does not qualify for a deduction.
Types of Qualified Expenses
Although most retirees do not qualify for a federal deduction, understanding previously deductible costs can be useful, especially for those in states that still allow them. States permitting these deductions typically follow pre-2017 federal guidelines.
Travel
Travel expenses for a move include transportation costs for the taxpayer and household members. This covers airfare, train tickets, or mileage if driving a personal vehicle. Before the deduction was largely eliminated, the IRS allowed taxpayers to deduct either actual expenses (such as gas and oil) or a standard mileage rate, which was 17 cents per mile for moving purposes in 2017.
Lodging costs during the move were deductible, but meals were not. If a state still permits moving expense deductions, it is important to check whether it follows the old federal rules or has its own guidelines. Some states may require a minimum moving distance to qualify.
Shipping Personal Effects
The cost of transporting household goods and personal belongings was deductible under prior federal rules. This included hiring a moving company, renting a truck, or using a storage container service. Fees for packing, crating, and insurance on shipped items were also eligible.
Storage fees were deductible for up to 30 days if necessary due to a delay in moving into the new home. For instance, if a retiree had to wait for their new residence to be ready and needed temporary storage, those costs might qualify under state tax rules. However, long-term storage or costs related to selling a home, such as real estate commissions or home repairs, were never deductible.
Temporary Lodging
Short-term housing costs during a transition to a new home were not deductible under federal law, even before the 2017 tax changes. If a retiree stayed in a hotel or rental property while waiting to move into a permanent residence, those expenses did not qualify. Some states may have different rules, so reviewing state tax codes is necessary.
If a retiree moves for medical reasons and incurs temporary lodging expenses, those costs might be deductible as medical expenses instead. The IRS allows deductions for lodging related to medical care if the primary purpose of the stay is treatment, subject to certain limits. However, this falls under medical expense deductions, not moving expenses, and is only deductible if total medical costs exceed 7.5% of adjusted gross income.
Documentation and Recordkeeping
Accurate recordkeeping is essential for reporting eligible moving expenses. Tax authorities require proof to substantiate deductions, and missing documentation can result in disallowed claims. Receipts, contracts, and financial statements should be organized and stored for easy retrieval if needed.
Categorizing expenses by type helps with recordkeeping. Transportation costs should be supported by airline tickets, fuel receipts, or vehicle rental agreements. Storage and shipping expenses require invoices from moving companies or self-storage facilities. Digital copies add security, reducing the risk of losing paper documents. Bank and credit card statements reflecting these transactions can serve as secondary proof if original receipts are misplaced.
The IRS generally recommends keeping records for at least three years from the date a return is filed. If income is underreported by more than 25%, the statute of limitations extends to six years. State tax agencies may have different retention guidelines, so requirements in both the departure and destination states should be verified.
Steps to Reflect the Deductions on Your Return
For retirees who qualify for a state-level moving expense deduction, accurately reporting expenses requires attention to state-specific filing requirements. Most states that allow these deductions follow prior federal guidelines, meaning taxpayers typically need to complete a state-specific form or worksheet to calculate the deductible amount.
Most states permitting moving expense deductions allow taxpayers to subtract eligible costs directly from gross income, reducing taxable earnings rather than claiming the amount as an itemized deduction. This affects adjusted gross income (AGI), which influences eligibility for other tax benefits, such as medical expense deductions or state-specific retiree exemptions.
Properly allocating expenses between deductible and non-deductible categories is also important. If only part of a move meets the state’s eligibility requirements, such as moving for employment rather than personal reasons, only the qualifying portion can be deducted. Failing to make this distinction could result in an audit or adjustment by the state tax authority.