Here’s Why You Probably Can’t Deduct Moving Expenses From Your Taxes in 2024
Moving isn’t cheap. If you can lighten the load a bit by deducting the expenses from your taxable income, then it seems like a no brainer to do so.
But can you do it?
According to the IRS, you can only claim moving expenses as a tax deduction if you are an active member of the military.
Sorry about that.
If you’re in the military, keep reading to learn everything you need to know about moving expense tax deductions.
If you’re not in the military, fear not. Jump to here to see if there’s anything you can do still.
Moving expenses are generally not tax deductible
The Tax Cuts and Jobs Act (TCJA) of 2017, set in place by the IRS for the 2018 tax year, suspended the deduction for moving expenses for all taxpayers except for active-duty members of the Armed Forces who move due to a military order and a permanent change of station.
So unfortunately, the answer is no. You can not deduct moving expenses from your taxes unless you’re an active member of the military. This means retirees or any other groups cannot deduct the expenses. It also is effective Nationwide, so neither Massachusetts, Colorado, Oregon, nor either other state can file moving expense tax deductions.
Prior to this change, a broader range of taxpayers could claim moving expenses if the move was closely related to the start of a new job and the new workplace met certain distance requirements from the taxpayer’s old home and old job. According to the TCJA, this suspension remains in effect until 2025, unless the law changes.
Why did the IRS update their tax laws on moving expenses?
The modifications to the tax laws on moving expenses were made as a part of a larger tax reform effort to simplify the tax code and broaden the tax base.
The TCJA removed or limited many itemized deductions, including the moving expenses deduction, while simultaneously doubling the standard deduction.
This change was designed to simplify the filing process and reduce the tax burden for many individuals, but it also eliminated certain benefits, such as the deduction for moving expenses.
What active military members need to know about moving expenses & tax season
Remember, if you’re in the military and you’re moving due to a military order and a permanent change of station, you can still claim moving expenses on your tax return.
In 2022, the IRS updated its Form 3903, which is used to calculate and claim the moving expense deduction for military members.
Here are some key considerations for active-duty military members as per the most recent Instructions for Form 3903.
- Eligibility: To claim moving expenses, military members must be moving pursuant to a military order and incident to a permanent change of station. This includes moves from home to your first post of active duty, from one permanent post of duty to another, and from your last post of duty to home or to a nearer point in the United States.
- What to Claim: Generally, active-duty military members can deduct the reasonable, unreimbursed expenses of moving themselves and members of their household. These include the costs of packing, crating, and transporting household goods and personal effects, including expenses for hauling a trailer, packing, crating, in-transit storage, and insurance for these items. It also includes travel expenses, such as lodging (but not meals) while traveling from the old residence to the new one.
- Completing Form 3903: This form consists of three parts. Part I is for moving expenses for which a reimbursement was received, Part II is for moving expenses not reimbursed, and Part III is where the deduction is calculated. In essence, military personnel will list their expenses in the respective sections, calculate their total expenses, and then subtract any reimbursements received.
- Record Keeping: It’s vital to keep thorough records of all moving expenses. This includes receipts, bill of lading, in-transit storage charges, and travel expense records. This will help if the IRS requires proof of the claimed expenses.
- When to Claim: The moving expenses deduction is claimed in the year in which the expenses are paid or incurred, regardless of when the reimbursement is received. Therefore, it’s important to track when payments are made to ensure they are claimed in the correct tax year.
It’s important for military members to familiarize themselves with this form and to accurately calculate their moving expenses, as this can potentially reduce their taxable income significantly.
What about non-military people and moving expense tax deductions?
The bottom line
While it’s true that for most taxpayers, moving expenses are no longer tax-deductible, it’s not all bad news. The broader tax reforms brought about by the TCJA mean that many people will see a decrease in their overall tax liability, even without the moving expenses deduction. And for active-duty military members, the deduction for moving expenses is still available.
As always, understanding your unique tax situation is key to maximizing your benefits and minimizing your liability. Whether you’re a military member moving because of a new order, or a civilian planning a big move, consult with a tax professional or trusted tax software to ensure you’re taking full advantage of the tax benefits available to you.