If you find yourself relocating for a new job, you may be wondering – are moving expenses tax deductible? If you’re taking on the endeavor of moving for work, you may be lucky enough to have an employer to cover your moving expenses. But the reality is not all employers will cover moving costs, and most don’t cover all of your expenses.
Here’s what you need to know:
Moving expenses are not tax-deductible for most people.
Unfortunately, since the Tax Cuts and Jobs Act of 2017 passed, most people will not qualify for federal tax deductions at this time. There are a few exceptions to the rule, which include active military. This bill has suspended the deduction for everyone else until the 2026 tax year. However, there is talk that this may be a permanent change.
In addition to the suspension of deductions for most people, the tax law change also impacts employer reimbursement for moving costs. By this, we mean that prior to the tax reform, if your new employer provided you with money to cover your moving costs, you would have been able to exclude these funds from your gross income. The Tax Cuts and Jobs Act of 2017 also suspend that exclusion for everyone but qualifying active-duty military personnel.
“This means you’d pay taxes on the money given to you by your employer as if the money was ordinary income,” states Christy Rakoczy of Credit Karma.
What moving costs are considered tax-deductible and which are not?
The IRS indicates that you can deduct moving expenses only if you are “a member of the Armed Forces on active duty and, due to a military order, you, your spouse, or your dependents move because of a permanent change of station.”
Only direct moving costs are deductible:
- Gas, oil, and mileage
- Parking fees, tolls
- Rental trucks
- Short-term storage
- Packing
- Insurance
- Cost of lodging on the way to a long-distance moved
- One trip per member of your household
- Standard mileage rate of 16 cents per mile
Nondeductible expenses include:
- Additional vehicle expenses
- House-hunting expenses
- Costs for adjusting to your new location (driver’s license, dog licenses, car registration)
- Cost of breaking your lease
- Loss on the sale of your previous home
- Storage for an extended period of time after the move
For a complete, in-depth list of which expenses are deductible and which are not, you can check out IRS Tax Form 3903.
How do I record the deduction?
Any military personnel requesting a tax deduction for unreimbursed moving expenses should use IRS Tax Form 3903, which includes specific directions for where to look and how to record the deduction correctly.
Are there state tax moving deductions?
The good news is that some states may still allow you to deduct moving expenses, despite the federal government suspending tax deductions for most people.
If your state’s tax laws change automatically when federal tax laws change will be the determining factor as to whether or not you can still file a deduction for moving expenses. Be sure to check with the laws of your state specifically for verification.
Planning a move?
While we are definitely not tax experts and always encourage you to consult with a tax professional, at Elite Moving, we do want the best for you and your move.
Allow us to lighten your load. We’ll do the heavy lifting, and you take care of your taxes.
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