Can I deduct moving expenses on my taxes?
Published on September 11, 2024
by Clark Stott
Clark Stott has been with Expat Tax Online since 2015. Being a dual national based in the UK, Clark has unique experience helping US citizens (and Accidental Americans) become tax compliant via the Streamlined Tax Amnesty program. Clark likes to help Americans in the UK keep their tax situations as simple as possible to avoid harsh IRS treatment.
Table of Contents
Can I deduct moving expenses on my taxes?
Moving expenses are no longer tax-deductible for most people. A 2017 tax law change, the Tax Cuts and Jobs Act (TCJA), stopped most people from deducting these expenses from their taxes from 2018 through 2025.
However, if you’re in the military and have to move because of military orders, you might still be able to claim this deduction.
What is the TCJA
The Tax Cuts and Jobs Act (TCJA) is a major tax reform law that was passed in 2017. This law made significant changes to the US tax system, including lowering tax rates for individuals and businesses, doubling the standard deduction, and eliminating or limiting many deductions, like the moving expenses deduction for most taxpayers.
What does this mean for me?
It means no more tax relief for most moves. If you’re not in the military, you won’t be able to deduct moving expenses on your taxes until at least 2026. If you’re planning a move, remember that these costs will be fully out-of-pocket.
What are the qualifications for deducting moving expenses?
You must be an active-duty member of the US Armed Forces who is moving due to a permanent change of station (PCS), like being reassigned to a new base or location.
Before the tax law changed, civilians could deduct moving expenses if the move was work-related and if the new job was at least 50 miles farther from their old home than their old job.
They also had to work at the new location for at least 39 weeks during the first 12 months after the move. These rules are currently paused for most taxpayers until 2026.
What if I’m way behind on my U.S. tax returns?
There is a special IRS program to help you catch up on your U.S. taxes safely, without fines and penalties
STREAMLINED AMNESTY
It’s for American citizens that didn’t know they had to file U.S. tax returns each year, and have therefore fallen behind. Some more than 30 years! With the IRS Streamlined Procedure, say goodbye to overdue tax returns, late fees, and penalties. If you have children, we can backdate your Child Tax Credit Refund for 3 years.
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How do state taxes affect the moving expenses deduction?
The way state taxes handle moving expenses can be different depending on where you live.
While the Tax Cuts and Jobs Act stopped most people from deducting moving expenses on their federal taxes, some states still allow this deduction.
In many states, the tax laws match up with federal laws. If you can’t deduct moving expenses on your federal tax return, you likely won’t be able to deduct them on your state return either.
However, some states have their own tax rules and might still allow you to deduct moving expenses.
Which states still allow you to deduct moving expenses?
- Arizona
- California
- Massachusetts
- New Jersey
- New York
- Virginia
These states permit moving expenses deductions on their state tax returns, even though the federal deduction is largely suspended until 2026 for non-military personnel.
Which moving expenses are deductible?
What can I deduct?
- Moving Your Stuff: The cost of transporting your household goods from your old home to your new home.
- Storage Costs: You can deduct the cost of storing your things for up to 30 days after the move.
- Travel Costs: You can deduct the cost of lodging (but not meals) while traveling to your new home.
What am I not allowed to deduct?
- Meals: The cost of meals during your move is not deductible.
- House-Hunting: If you take a trip to find a new home before you move, those costs aren’t deductible.
- Temporary Housing: If you have to stay in temporary housing after your move, those costs can’t be deducted.
Can I still deduct if I am moving outside the US?
Yes. If you’re in the military and moving overseas due to orders, you can still deduct eligible moving expenses, just like you would for a move within the US.
How do I claim the moving expenses deduction?
To claim the moving expenses deduction, you’ll need to use Form 3903.
- Get Form 3903 (Moving Expenses): This is the IRS form you’ll use to report your moving expenses.
- Fill Out Your Personal Information: Enter your name, Social Security number, and other basic details.
- Report Your Moving Expenses:
- Line 1: List the costs of transporting your household goods and personal effects.
- Line 2: Enter the amount you spent on travel (excluding meals) and lodging for yourself and your family during the move.
- Calculate Your Deduction: The form will help you calculate the total amount you can deduct based on the expenses you listed.
- Attach Form 3903 to Your Tax Return: After completing Form 3903, attach it to your Form 1040 (your main tax return) when you file your taxes.
Can you deduct moving expenses if you’re self-employed?
Not anymore.
Before 2018, if you were self-employed and moved for work, you could deduct your moving expenses. This included the costs of moving your stuff and traveling to your new home. But with the new law, this deduction is paused for most people until 2026.
What if your employer reimburses your moving costs?
Before the law changed (pre-2018), if your employer reimbursed you for moving expenses, that money didn’t count as income, so you didn’t have to pay taxes on it. Plus, if you had any moving costs that weren’t reimbursed, you could deduct those from your taxes.
Under the new law since 2018, any money your employer gives you to cover moving costs is now considered income. This means it’s added to the money you earned during the year, and you have to pay taxes on it.
The only exception is for military members who are moving due to orders.
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