Can You Deduct Moving Expenses on Taxes?
Learn about the current, specific requirements for deducting moving expenses on your U.S. federal tax return.
The ability to deduct moving expenses on federal income taxes has undergone significant changes in recent years. While it was once a common deduction for many taxpayers, the rules implemented by the Tax Cuts and Jobs Act of 2017 (TCJA) altered its availability. Understanding these updated regulations is essential for anyone considering a move and its potential tax implications.
Who Can Deduct Moving Expenses
For tax years beginning after 2017, the moving expense deduction is generally suspended for most taxpayers. This suspension is set to remain in place through 2025. This means that individuals moving for a new job or other personal reasons typically cannot claim these expenses on their federal income tax return.
There is an exception to this rule for active-duty members of the U.S. Armed Forces. These individuals may still be eligible to deduct unreimbursed moving expenses if their move is due to a military order and constitutes a permanent change of station (PCS). A permanent change of station includes a move from a service member’s home to their first active-duty post, between permanent duty stations, or from their last post of duty to their home or a nearer point in the United States. The move from the last post of duty must occur within one year of ending active duty or within the period allowed under Joint Travel Regulations. This exception also extends to the spouse and dependents of eligible military members.
What Expenses Are Deductible
For active-duty military members who qualify, certain unreimbursed expenses related to a permanent change of station can be deducted. These deductible costs include reasonable expenses of moving household goods and personal effects. This can cover hiring a professional moving company, renting a truck or trailer, and packing supplies.
Additionally, qualifying travel expenses from the old home to the new home are deductible. This includes transportation and lodging for the military member and their household members. However, expenses for meals during the move are specifically not deductible. For vehicle use, the Internal Revenue Service (IRS) provides a standard mileage rate for moving purposes.
Documenting and Calculating Your Deduction
Maintaining detailed records is important for any tax deduction. Active-duty military members should keep documentation of all costs incurred for their eligible move. This includes receipts for transportation, lodging, packing materials, and services used to move household goods.
It is advisable to keep mileage logs if a personal vehicle was used, noting dates, locations, and total miles driven. These records provide evidence to support the claimed deduction in case of an IRS inquiry. The total deductible amount is calculated by summing eligible and unreimbursed expenses.
Reporting the Deduction
Qualified active-duty military members report their deductible moving expenses on IRS Form 3903, “Moving Expenses,” which is designed to calculate the allowable deduction. Information from Form 3903 is transferred to Schedule 1 (Form 1040), “Additional Income and Adjustments to Income.”
The moving expense deduction is classified as an “above-the-line” deduction. This means it reduces a taxpayer’s adjusted gross income (AGI), which can be beneficial as AGI is used to determine eligibility for many other tax credits and deductions. The completed Form 3903 is submitted along with the taxpayer’s federal income tax return, Form 1040.