Are Moving Expenses Tax Deductible (2024 Guide)
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The cost of moving can get overwhelming when you consider the price of packing materials, truck rentals, and travel expenses. The Internal Revenue Service (IRS) occasionally allows federal tax deductions on moving expenses. Our guide will help you determine whether you qualify and how you can deduct if you do.
Eligibility
Taxpayers were allowed to deduct moving costs from their income tax when they relocated for a new job until 2017, when Congress passed the Tax Cuts and Jobs Act. Your new job location had to be at least 50 miles from your old home for you to qualify, and you had to start your new job nearly immediately after your move.
Since tax laws changed, most people can’t claim moving expenses on their federal tax return unless they’re military members. Moves must be permanent changes of station or military order, which include moves to first active-duty posts, moves from one permanent post to another, or moves from final posts to home. Certain states, such as California, still allow taxpayers to deduct moving expenses from their state income taxes if they meet specific time and distance criteria. Contact a tax advisor to determine if your state allows these deductions.
Expenses
Once you’ve determined whether you’re eligible for moving expense reimbursements, understand what you can claim. The following items are eligible expenses:
- Personal items: You may be eligible for reimbursements if you paid for the packing, crating, or shipping of household goods.
- Shipped items: The items you shipped to your new home, including your car and pet, may qualify as a deduction.
- Storage expenses: If you stored items for 30 consecutive days during the moving process, you may receive a reimbursement for related storage costs.
- Travel costs: The government may cover the cost of lodging, tolls, airfare, parking fees, and gas mileage. The standard mileage rate for the 2023 tax year is .22 cents per mile.
- Utilities: You may receive reimbursement if your utility company charges you for connecting or disconnecting your utilities.
You can’t deduct any products or services provided by the government or the expenses of an employee or tenant.
Documents
Collect the receipts and bank statements you accumulate during your moving process. Present these when it’s time to claim your moving expense deductions as part of your tax filing. You’ll have to submit IRS Form 3903 as an attachment to IRS Form 1040, which is the document taxpayers use to file their income tax returns.
Professional Advice
Tax professionals, or certified public accountants, study tax codes and are up to date on the most current tax laws. Contact a tax advisor if you aren’t sure whether you qualify for moving expense deductions or what you can claim.
Our Conclusion
Members of the Armed Forces can receive reimbursements for their moving expenses, and some states allow residents to claim moving costs if they meet certain criteria. Otherwise, reimbursements are unlikely. Hire a tax advisor if you aren’t sure whether you can deduct moving expenses, and nail down a comprehensive moving budget to keep expenses down.
FAQ About Tax Deductions of Moving Expenses
What are the pros and cons of claiming moving expenses?
The biggest pro of claiming moving expenses is that you’ll reduce the amount of income that’s subject to tax. The biggest cons are that you’ll have out-of-pocket expenses and must wait for reimbursements.
What is the difference between moving expenses and relocation expenses?
Moving expenses refer to the costs associated with any move to a new home for any reason. Relocation expenses refer to the costs associated with a move to a new location, specifically for a job.
Is it worth claiming moving expenses on taxes?
It is worth claiming moving expenses on taxes because the cost of moving can be high. However, you’re unlikely to qualify unless you’re a member of the Armed Forces.
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