Update: With the Republican Tax Cut & Jobs Act (tax reform) that was signed in to law in late 2017, the moving expense tax deduction no longer exists for 2018 and beyond, until the law expires in 2025. The only exception is for active military in certain circumstances (updated for the 2022 and 2023 tax years and detailed in the next section below). The rest of the below article will cover the pre-tax reform law.
Military Moving Expenses Tax Deduction (Updated for 2022 and 2023):
On members of the military being able to deduct moving expenses in their tax returns, the IRS states:
You can deduct moving expenses if you are a member of the Armed Forces on active duty and due to a military order you move because of a permanent change of station. Use Tax Topic 455 or see Form 3903.
Non-Military Moving Expenses Tax Deduction:
As noted above, the remainder of this article focuses on non-military tax filers and the now expired law that was in place prior to the 2018 tax year.
Reader, Kayla, writes in:
I’m getting my first job and moving to a new location. Can I get any tax deductions for moving expenses?
Congrats on landing your first job, Kayla – and great question.
Deducting moving expenses is, in fact, something that is allowed by the IRS. This is one of those hidden tax deductions that is not very well known. I’ve previously been guilty of moving a few times without taking advantage of this deduction – which is a bummer on my part, and I’m sure to the millions who have overlooked this deduction. So your question brings up a good awareness opportunity to share with others to keep in mind for present and future moves.
However, like most things IRS, there are always some restrictions, limitations, and qualifications on who can claim a tax deduction. We’ll go through some of the basics and then get in to deductible and non-deductible moving expenses, and also – how to claim the deduction.
Who Can Deduct Moving Expenses?
If you move for a change in job or business location, or in order to start a new job or business, you may be able to deduct what the IRS refers to as “reasonable moving expenses” (more on that in a bit). To qualify, there are three conditions or “tests” that you must satisfy:
1. Your move is closely related to the start of work or a new primary job.
2. Distance Test: your new main workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home. For example, if your old job location was located 5 miles from your old residence, your new job location must be at least 55 miles from your old residence, in order to be able to deduction expenses associated with the move to your new residence. If, a first job, the same rule applies to your previous and new residence.
3. Time Test: this one is a little trickier, and I presume it is in place because the IRS wants to dissuade deductions every few months from serial re-locators:
If you are an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location.
If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location.
If you are both an employee and self-employed, you must meet one or the other.
There are exceptions to the time test in case of armed forces service, death, disability and involuntary separation.
Deductible Moving Expenses
There are only two categories of expenses you can deduct:
- Moving your household items (including in-transit or foreign-move storage expenses). This includes the cost of renting/driving a moving truck or van, as well as the cost of hiring movers to pack and move your belongings.
- Moving yourself and members of your household (travel to your new home). This includes mileage or transportation expenses and lodging – but no meals.
On #2, if you take a car (or multiple cars) you can deduct actual expenses (e.g. oil, gas, windshield washer solvent) – or you can deduct the IRS standard moving expenses rate per mile. Either way, you can also separately deduct parking fees and tolls, but no general repairs, maintenance, insurance, or depreciation.
It’s also important to note that you cannot deduct any side excursions (e.g. a Portland to L.A. move with a side weekend to Yosemite – sad, I know). You really can only deduct expenses for direct mileage necessary for the move.
Finally – keep any and all receipts and document all miles if you go the mileage deduction route.
Non-Deductible Moving Expenses
A big previously mentioned non-deductible moving expense is meals/food.
Another huge consideration is that you cannot deduct any moving expenses covered by reimbursements from your employer that are excluded from income.
And just about everything not listed previously as deductible, you cannot deduct.
- Expenses associated with the purchase of your new apartment/home (closing costs, title, etc.)
- House or apartment hunting expenses
- Expenses associated with selling a home (realtor fees, home improvements, staging, closing costs, mortgage fees, and points)
- Home sale losses
- A driver’s license (even if you did not have one one prior to the travel)
- Expenses of entering into or breaking a lease
- Security deposits made or lost
- Storage charges not incurred in transit and for foreign moves
- Return trips
Next Steps & Other Resources for Deducting Moving Expenses
For more information on deductible and nondeductible moving expenses, refer to IRS publication 521 on moving expenses, including some information I did not get in to on moves to locations in and outside the United States and retirees, survivors, and armed forces members.
Deducting Moving Expenses Discussion:
- Have you ever deducted moving expenses? Did you find it easy/difficult to do?
- How much were you able to deduct?
- Have you deducted moving expenses when self-employed or retired? Share your story.