Are Moving Expenses Tax Deductable?

What Are Considered Moving Expenses?

Wondering exactly what moving expenses are qualified for IRS deductions? You can typically deduct travel-related fees from your old home to your new residence, plus storage and transportation costs for personal items.

Here are some moving expenses the IRS says qualified taxpayers can deduct:

• Transportation: In-transit storage, trailer hauling fees, pet transportation, vehicle shipping, and moving household goods in a vehicle or container
• Storage: Storage and insurance fees for up to 30 days after you move your possessions from your old home to your new home
• Lodging and travel: Temporary lodging expenses not already covered by military allowances or the government, fuel and oil for the vehicle(s) used during the move, parking fees, and tolls
• Packing: Packing supplies, crating fees, and packing and unpacking assistance from a qualified mover

Keep in mind that many tax laws change annually. Check with your accountant or personal finance advisor if you have questions about qualified deductions. They can help answer questions such as, "Are closing costs tax-deductible for military moves?"

A financial expert can also provide examples of moving costs that do not qualify for deductions, so you can plan accordingly. For example, meals are not deductible during military moves. You also can't claim a tax break for driver's license fees, real estate taxes, or car tags.

What is the Time Test?

The time test refers to the 1-year limit that affects many military members who move after a station change. This time limit can be waived or extended under Joint Federal Travel Regulations.

Active-duty military members who move for a permanent station change don't have to meet the time test. If active duty ends, your move typically must occur within 1 year. Otherwise, your moving expenses may not be tax-deductible.

What is the Distance Test?

The distance test describes how far a taxpayer interested in a deduction must move after selling their primary home. A military member who is on qualified official extended duty must serve at least 50 miles from their main home. To deduct certain expenses, they must also report a gain — not a loss — on the sale of the home.

How Can I Deduct My Moving Expenses?

You can deduct moving expenses on your federal tax return by filing IRS Form 3903. This form helps you calculate military moving expense deductions for yourself and your family. Follow the instructions carefully, and complete each line on the form. Otherwise, your tax return may have errors and get rejected.

"Do I need receipts for moving expenses?" is a question that crops up pretty often. It's wise to keep receipts for tax-deductible moving expenses, though you may not need to provide copies when you file a federal return. But receipts can help ensure you get the maximum credits available when you deduct your moving expenses. You should also hold on to receipts in case you get audited.

Tax breaks are possible for many military members who relocate. Just be careful not to double-dip when tax time rolls around, as you can't claim deductions for expenses the government already reimbursed. Nonreimbursed expenses for qualified packing, storage, travel, lodging, and transportation are fair game.

Now that you’ve got a better idea of what you can do to deduct your moving expenses from your taxes, here's to a smooth (and hopefully tax-deductible) move!