Moving to a new home can be an exciting adventure, but it often comes with a hefty price tag. According to home services website Angi, local moves (under 100 miles) can cost between $920 to $2,530, while longer cross-country moves can range from $2,700 to $10,000. Unfortunately, one of the most frustrating aspects of moving is that most people can no longer deduct these expenses on their taxes — even if you’re relocating for work.
In this blog post, we’ll explore the changes to tax laws regarding moving expenses, what moving costs may still be deductible, and how you can make the most of your tax benefits when relocating.
The History of Moving Expense Deductions
There was a time when individuals could deduct their moving expenses from their taxes if they were relocating for a new job or employer transfer. To qualify for this deduction, your new job had to be far enough from your former home, and you had to start your new position within a certain period after your move.
However, with the passage of the 2017 Tax Cuts and Jobs Act, these deductions were eliminated for most taxpayers. Now, the only exception is for active-duty members of the U.S. military who are relocating due to a military order that results in a permanent change of station.
This change will remain in effect until at least January 1, 2026, unless further legislation alters it. So, unless you’re a member of the military, you’re likely not eligible to deduct your moving expenses for a job-related relocation.
What Moving Expenses Are Tax-Deductible?
For those who are active-duty military members moving due to orders, there are still some moving expenses that can be deducted. The IRS considers nearly all the costs associated with your move as potential deductions, provided the government hasn’t reimbursed you for these expenses. This includes:
- Moving Trucks and Professional Movers: Costs for renting trucks or hiring moving services.
- Packing Materials: Boxes, tape, bubble wrap, and other packing supplies.
- Travel Costs: Expenses for travel, whether you’re driving or flying, including gas and airfare.
- Storage: If you need to store your belongings temporarily, those costs may be deductible.
- Cleaning Supplies and Services: Items and services used to clean your home before or after the move.
- Insurance: Insurance coverage for your belongings during the move.
- Hotel Rooms: If you need to stay overnight while traveling to your new home, lodging costs are deductible.
What Moving Expenses Are Not Tax-Deductible?
For military members, the list of non-deductible moving expenses is relatively short. The IRS specifically excludes the cost of meals from deductions. For example, if you stop for a meal while driving to your new station, the cost of that meal cannot be deducted. The same applies to groceries you purchase while settling into your new home.
Requirements for Deducting Moving Expenses
If you were moving for a job before 2018 and didn’t claim the deduction, you might still be eligible to file an amended tax return to claim your moving expenses. However, there are important criteria to consider:
- For Non-Military Members: To deduct moving expenses prior to 2018, you must have moved for a new job or a job transfer. Additionally, you must meet both the time and distance tests:
- Time Test: You must have worked full-time for at least 39 weeks within the first 12 months after your move.
- Distance Test: Your new job must be at least 50 miles farther from your old home than your previous place of employment. For example, if you lived 30 miles from your old job, your new job must be at least 80 miles from your old home.
- For Military Members: Active-duty military members are not required to meet the time or distance tests. If you’re moving due to military orders, the IRS allows you to deduct your moving expenses without these restrictions.
How to Deduct Your Moving Expenses
If you qualify to deduct moving expenses, follow these steps to claim your deduction:
- Fill Out IRS Form 3903: This form helps determine which moving expenses can be deducted. Here’s how you’ll complete it:
- Line 1: List your storage and shipping costs, such as those for professional movers, rental trucks, and insurance.
- Line 2: Record your travel costs, including gas, mileage, lodging, and any airfare.
- Attach Form 3903 to Your Tax Return: Once you’ve completed Form 3903, attach it to your IRS Form 1040. Report the total moving expense deduction on Line 14 of Form 1040 under “Adjustments to Income.”
Conclusion
While the 2017 Tax Cuts and Jobs Act eliminated moving expense deductions for most taxpayers, active-duty military members still enjoy the benefit of deducting qualifying relocation costs. If you’re planning a move and you’re eligible to deduct moving expenses, be sure to keep track of all related expenses and consult with a tax professional to ensure you’re making the most of your potential deductions.
At Avantiway Financial, we understand the complexities of relocation and can offer guidance on how to navigate these changes, especially when it comes to financing your new home. Whether you’re moving locally or cross-country, we’re here to support you every step of the way.
