What Moving Expenses are Tax Deductible?

Did you know that there are some circumstances that your move costs can be tax deductible?  With tax season upon us and so many folks asking if they can deduct their move expenses from their 2018 taxes; we sat down with Chris Smith, owner of RBI Business & Insurance Services to get the inside scoop for you!

For tax years prior to 2018, you may qualify to claim the cost of your moving expenses as a deduction on your federal income tax return. The IRS allows taxpayers to deduct eligible moving costs.

This deduction is not subject to any limits, so you can claim all of your qualified moving costs if you meet the eligibility requirements. While moving expenses you pay yourself are deductible, expenses that your employer reimburses you for are not eligible for the deduction.

For deducting your moving expenses in 2018- how do you know what you can claim and how to do it? First- it has to pass the Time and Distance Tests and be a Qualifying expense.  Read on:

Time test

The timing of your move closely relative to the start of your new employment in order to qualify for the tax deduction. To meet this standard, you’ll have to start your new job and work full-time for at least 39 weeks within the first 12 months after your move.

Distance test

Another requirement involves the distance between your new workplace and your old home. To claim your moving costs, your new place of employment must be at least 50 miles farther away from your old home than your old place of employment. As an example, if you lived in a home that was 20 miles away from your old job, you’ll have to take a job at a new company that is at least 70 miles away from your old home to qualify for the deduction.

*Members of the United States military can claim their moving expenses regardless of the distance or employment requirements if they are making a permanent change in their military status such as retirement or termination of service.

Qualifying expenses

All of the expenses you claim must be both reasonable and necessary to your move. Reasonable moving expenses may include:

  • cost of gas or the mileage on your vehicle
  • rental trucks
  • moving company charges
  • short-term storage
  • boxes
  • cost of lodging at a hotel on the way to your new home.

The IRS allots a standard mileage rate that you can use to calculate your travel expenses, but if you prefer, you can keep up with your actual transportation costs and deduct those instead. Eligible travel costs include gas, oil, parking fees, and tolls.

Now that you know if you can deduct your moving expenses from your 2018 taxes- the next step is knowing how:

Completing Form 3903 Moving Expenses

Shipping and storage costs go on line 1 of Form 3903. Travel, lodging, and gas costs go on line 2. Reimbursements from your employer for any moving expenses, are reported on line 4.

If your reimbursement exceeds the total of your out-of-pocket expenses, you won’t be able to deduct your moving expenses and you’ll have to claim the excess reimbursement as taxable income. However, if your personal expenses were more than the amount your employer reimbursed you, you can deduct your out-of-pocket moving expenses to reduce your taxable income.

Thanks, Chris, for sharing your expertise about Deducting Moving costs from 2018 taxes with everyone!  For more on what’s new for the 2018 tax year- see https://rbisvcs.com/ten-big-changes-for-the-2018-taxes/

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