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What Moving Expenses Are Tax Deductible?

What Moving Expenses Are Tax Deductible?

In this post, you will learn; what moving expenses are tax-deductible. Read along to learn more about deducting moving expenses from your taxes.

If you have to relocate due to a new job a considerable distance from your home, you may have to consider whether your moving expenses can be claimed for a tax deduction. Moving is a very expensive process, and those costs tend to skyrocket when your new home is many miles away from your current home. If you must relocate, you might have heard that you could claim the costs on your income taxes and recoup some or all of them.

But is it an option for you? And if so, what would the requirements be, and what exactly can you claim for a deduction? These are important questions you need answers to before filing your Federal returns, and the IRS isn’t known for forgiving mistakes when you file. A small mistake could end up causing you serious issues later on.

In this article, we will let you know how to determine your eligibility, as well as what requirements you will need to meet in order to answer your question of what moving expenses are tax-deductible.

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Most People Aren’t Eligible For Moving Tax Deductions

For most people, deducting the costs of your move on your Federal and taxes isn’t an option. Congress did away with this Federal Tax deduction in 2018, with few exceptions. The Tax Cuts And Jobs Act of 2017 eliminated this deduction until January 1st, 2026, but there are discussions in the works to make the eliminations permanent. However, there are a few individuals who still qualify for the Moving Expense Deductions.

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If you are active-duty military, you may qualify for these deductions if you had to relocate due to a permanent change of station. This also applies to the spouse or dependant of a military member who is classified as deceased, imprisoned, or deserted. 

You may also qualify for these deductions if you are a self-employed business owner and your move was prompted by a need to relocate for your new business. This also applies if you have relocated back to the U.S. after working abroad upon retirement or are a family member of that individual. The exception also applies in some cases where an individual has lost their job due to a disability.   

Eligibility And Requirements For Tax Deduction

If you believe you qualify for moving expense deductions, it is important to know how to determine your eligibility, as well as what requirements you will have to meet to receive the deductions. 

Only direct moving costs are deductible in the U.S. We have provided a list of acceptable deductions below:

  • Travel costs for yourself and household members.
  • Packing and moving household goods
  • Shipping your vehicle
  • Shutting off the utilities for your old residence
  • Parking
  • Temporary lodgings en route to your new home
  • Storage rental for up to 30 days 

Please note, deductions of this nature do not include the following:

  • Food costs while traveling
  • Any side trips taken while traveling
  • Traveling to see, purchase, remodel or sign a lease for your new home prior to move
  • Return trips to your old home after a move  
  • Temporary lodging prior to relocating to your new home

There are also three additional requirement tests you must complete prior to receiving a moving expense deduction.  We have listed them below:

  • Distance Test: Your new home must be at least 50 miles away from your prior home than your current home is from your new work location. 
  • Time Test: You must relocate within 12 months before or after you start working at your new job location. 
  • Length Of Work Test: You must have worked 39 weeks in the year after the move, though these weeks are not required to be consecutive or for the same employer. If you are self-employed, you have the additional requirement of working in your new location for 78 weeks after your move during a period of 2 years after your relocation. 

It is important to note that if you are active military and you are relocating due to being moved to a new duty or retirement location, you are exempt from the distance and length of work tests.    

Regarding State Taxes and Moving Expense Deduction

While most individuals are not able to claim their moving expenses on their Federal taxes as a deduction, some of the states that collect an income tax will allow it. It is recommended that you check the laws in your state to verify that your state allows this deduction, and what the requirements to do so are for your state. If you are moving to a different state, make sure you check your new state’s laws regarding this deduction as well. 

In Conclusion

While most people do not qualify due to changes in Federal law, there are some exceptions, but there are specific eligibility requirements and tests in order to qualify. With the help of this article, you now have the tools to determine whether you meet the terms for eligibility and requirements, as well as to help you figure out what moving expenses are tax-deductible. For those who live in, or are moving to the Fairfax, VA area, TopProMoving is here to help.