Can Moving Expenses Be Claimed as Tax Deductions?

Published: August 15, 2024

Moving can be both exciting and stressful, and it often comes with a hefty price tag. From packing and transportation to settling into a new home, the costs can quickly add up. One common question that many people have is whether these moving expenses can be claimed as tax deductions. If you’re wondering about the tax implications of your recent move, this guide will help clarify what you need to know.

Understanding Moving Expense Deductions

In the past, moving expenses could be a significant tax deduction, but recent changes in tax laws have shifted the landscape. Here’s a breakdown of the current rules and what they mean for you.

The Impact of Tax Reform

The Tax Cuts and Jobs Act (TCJA), which went into effect in 2018, made substantial changes to tax deductions, including those for moving expenses. Prior to this reform, individuals could deduct certain moving expenses if they met specific criteria. However, the TCJA introduced a major change: moving expenses are now only deductible for active-duty members of the armed forces who move due to a military order.

Who Can Still Claim Moving Expenses?

If you’re not in the military, the new tax laws mean that you generally cannot claim moving expenses on your federal tax return. This includes costs associated with transportation, moving services, and temporary lodging. The change applies to tax years 2018 through 2025, so unless there’s a significant change in legislation, these deductions are not available for most taxpayers during this period.

What About State Taxes?

While federal tax laws have tightened, some states may still allow deductions for moving expenses on state income tax returns. It’s essential to check the specific tax rules for your state, as they can vary significantly. Some states might have more lenient regulations or offer different deductions for moving costs. Consulting with a local tax advisor or checking your state’s tax guidelines can provide clarity on what is allowed.

Special Cases: Military Moves

If you’re an active-duty member of the armed forces, you’re in luck. The TCJA retained the moving expense deduction for military personnel who are moving due to a military order. This includes moving expenses for relocating to a new duty station or base. The deduction can cover various expenses, such as:

• Transportation costs for yourself and your family
• Costs to ship your household goods
• Temporary lodging expenses while en route to your new location

Keep detailed records of all expenses related to your military move. You will need to complete IRS Form 3903 to claim these deductions.

Employer-Provided Moving Expense Reimbursements

Another aspect to consider is whether your employer provides moving expense reimbursements. In the past, these reimbursements were often tax-free. However, the TCJA also changed the rules regarding employer-provided moving expense reimbursements. Now, these reimbursements are typically considered taxable income and must be reported on your tax return. Your employer should include these reimbursements on your W-2 form, and you’ll need to account for them when preparing your taxes.

The ability to claim moving costs as tax deductions has changed significantly with the TCJA, leaving many taxpayers ineligible to deduct these expenses on their federal returns. Active-duty military members are an exception and can still benefit from deductions related to military orders. For others, it’s crucial to stay informed about state-specific tax rules and consider alternative ways to manage moving expenses. Planning ahead and keeping detailed records can help make the moving process easier, even if the tax benefits are no longer available.

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