What Is Considered Moving Expenses?

Understanding what qualifies as a moving expense is important for relocation. Relocation involves numerous costs, and distinguishing between qualifying and non-qualifying expenses is a common challenge. This article clarifies the types of costs generally considered moving expenses. While tax laws have changed, the fundamental definitions remain relevant for certain groups and for comprehending the financial aspects of a move.

Core Conditions for Moving Expenses

To be considered a moving expense, an expense must meet specific criteria related to the relocation’s purpose and logistics. Requirements include a connection to employment, a distance test, and a time test. However, due to the Tax Cuts and Jobs Act (TCJA) of 2017, most taxpayers cannot deduct moving expenses for federal tax purposes from 2018 through 2025.

An exception applies exclusively to active-duty members of the U.S. Armed Forces. If their move is necessitated by a military order and involves a permanent change of station, these expenses may still qualify. For others, the move must relate to starting a new job or business, typically within one year of beginning new employment.

The distance test requires the new workplace to be at least 50 miles farther from the old home than the old workplace. For instance, if a former commute was 15 miles, the new job must be at least 65 miles from the previous residence to qualify. Active-duty military members are exempt from this distance requirement.

A time test mandates full-time employment in the new location for a specific duration. Employees must work at least 39 weeks during the 12-month period immediately following the move. Self-employed individuals must work full-time for at least 78 weeks within the 24-month period after the move, with at least 39 weeks in the first 12 months. Active-duty military personnel are not subject to this time constraint.

Allowable Moving Expenses

Once the core conditions are satisfied, specific types of costs are generally recognized as allowable moving expenses. These expenses are typically those directly connected to transporting household goods and personal effects, as well as the travel of the individual and their household members to the new residence. All eligible expenses must be considered reasonable and necessary for the relocation.

Costs associated with transporting household goods and personal effects include hiring professional movers, renting moving trucks, or using a personal vehicle for the move. This category also covers expenses for packing supplies like boxes, tape, and bubble wrap, as well as crating and insurance for belongings during transit. Additionally, the cost of shipping cars and household pets to the new home is included.

Temporary storage and insurance for household goods and personal effects can also qualify, but only for a limited period. This applies to storage within any 30 consecutive days after the items are moved from the old home and before they are delivered to the new one. Expenses for connecting or disconnecting utilities that are necessary for moving household items or appliances are also considered.

Travel expenses for the individual and their household members from the old home to the new home are also part of allowable moving costs. This includes the cost of transportation, such as airline or train tickets, or the actual expenses for gas, oil, parking fees, and tolls if driving a personal vehicle. Alternatively, a standard mileage rate, such as 21 cents per mile for 2024 and 2025, can be used for vehicle costs. Lodging expenses incurred during the travel to the new home, including the day of arrival, are also covered. Household members do not need to travel together or at the same time for these expenses to qualify.

Expenses Not Considered Moving Expenses

While many costs are associated with relocating, several common expenditures are generally not considered moving expenses, even if the fundamental conditions for the move are met. These non-qualifying expenses are typically personal in nature or relate to housing transactions rather than the physical move itself.

One common non-allowable expense is the cost of meals incurred during the move. Expenses related to house hunting trips, such as travel and lodging to search for a new residence before the actual move, do not qualify. Temporary living expenses, including hotel stays or short-term rentals beyond the limited lodging allowed during the transit period, are also excluded.

Costs associated with selling an old home or purchasing a new one are not considered moving expenses. This includes real estate commissions, mortgage points, and other closing costs. Fees or penalties for breaking a lease at the former residence are also not covered.

Additionally, storage charges for household goods and personal effects after arrival at the new home, or for periods exceeding the 30-day in-transit limit, are generally not included. Other non-qualifying items can include vehicle maintenance and repairs incurred during the move, traffic violations, or fines. Moving furniture or goods acquired during the journey to the new home also does not qualify.