Are moving expenses tax deductible? Yes and no. If you moved for a new job in 2017, the good news is that some of your moving expenses may be tax deductible. However, that tax break was omitted in 2018 due to The Tax Cuts and Jobs Act. It remains to be seen if this provision will become permanent, but it will remain in effect until 2025.
For anyone who moved in 2018 or 2019, find out more about deductible moving expenses and how they apply to your return you’ll file in the coming months. We’ve highlighted some critical areas to remember. If in doubt, discuss what moving expenses are tax deductible with a qualified tax accountant.
1. Moving expenses cannot be deducted in 2019.
If you read the intro carefully, you’ll know that because of The Tax Cuts and Jobs Act, deducting moving expenses for a new job is no longer allowed in 2018-2025. However, that means that anyone who moved for a career in 2017 might still qualify on their tax return. Also, military members will be able to deduct moving expenses when they have to move for a permanent change of station.
2. You must meet certain criteria in order to take the deduction.
Just because you moved in 2017 doesn’t mean you’ll be able to deduct moving expenses. Unfortunately, there are specific circumstances that allow you to take this deduction. To get an idea if you qualify, see if all three of these factors apply to you.
- Time Frame of Move. You must start your new job within a year of moving to a new location. You can move before or after you start your job, so long as the job start date and moving day are within 12 months of each other. For instance, if you start your job in February, but your family doesn’t join you until June, you will still qualify for this deduction in 2017.
- The Distance to New Job. Your new place of employment must be at least fifty miles further away from your old house than your old job. For instance, if your old job was ten miles away from your old home, then your new job must be sixty miles away from your old house to qualify. However, if your new job is only 20 miles away from your old house, you will not be able to deduct moving expenses.
- Length of New Job. You must work at your new job for a minimum of 39 weeks within the first year following your move. If you are self-employed, you must follow those criteria and also work a total of 78 weeks for the two years following the move. There are some exceptions to this rule listed below.
3. There are exemptions to consider if you don’t meet the above criteria.
The three factors above might seem stringent, but they are to ensure that the deduction only applies to people moving for work. If the three criteria above didn’t apply to you, see if you qualify for an exemption. Some exceptions include:
- Active military members that have to move because of a permanent change of station or PCS move don’t need to work for a specific length of time or pass the distance test.
- If you are moving back to the United States from abroad to retire, you don’t need to work at a new job to claim moving expenses.
- When the taxpayer can no longer work at your new job due to disability or death, they are exempt from the length of job requirement.
- In the event that a worker is laid off for any reason other than misconduct, they are exempt from the length of job requirement.
4. Find out which moving expenses qualify for this deduction.
Deducting moving costs only covers certain moving expenses. One thing this deduction will not cover is the cost of any meals during your travels. Here are some moving costs you can add up to deduct:
- Any shipping costs incurred to your new home
- Packing and moving costs
- Travel costs, like car rental or airfare
- Hotel and lodging costs during the move
- Storage unit costs for temporary storage
- Rental truck costs
- Moving boxes and supplies
- Parking fees and tolls
5. You cannot claim moving expenses that your employer paid.
It’s not possible to double dip on this deduction. For instance, if your new or current employer gave you a moving stipend to cover moving costs, you might not qualify for this deduction. Either way, you’ll need to keep track.
If you had to pay more than the stipend from your employer, you might be able to deduct the difference. Keep thorough records of everything you pay out and any reimbursements that were given. When you fill out the tax form, you’ll have to reconcile the difference between what your employer paid and what you paid.
Be careful here. If what you’re employer paid you exceeds the moving expenses you have a record for, you will have to add the difference to your taxable income.
6. Fill out the proper forms on your 2018 tax return.
If you qualify to claim moving expenses, fill out IRS Form 3903 and also line 26 on Form 1040. Read the instructions carefully, but here are some general guidelines:
- Add shipping and storage costs to line 1 on Form 3903
- Add travel-related expenses to line 2 on Form 3903
- If your employer paid any stipends for moving, enter that figure on line 4 on Form 3903
7. This deduction is in addition to an itemized or standard deduction.
It might not seem worth it to keep track of every little expense when you’re moving, considering how many other things you need to get in order. However, it might be worth it in the long run to go back and see what you spent where. The great thing about this tax deduction is that it is taken off in the adjustments to income section on Form 1040.
This means that this deduction is in addition to an itemized or standard deduction. So long as you qualify, any moving-related expenses are factored in to lower your income before the principal tax deduction.
Read Also: 10 Money Saving Tips When Moving on a Budget
For anyone who is moving between the years of 2018 – 2025, these moving expense deductions won’t apply to you unless you’re a part of the military. We hope this breakdown helped you figure out once and for all if moving expenses are tax deductible. Perhaps Congress will bring this provision back in 2026 for future movers looking to offset the cost and strain of relocating.