Posted by James Financial Services Inc

Military Moving Expenses, Broken Down.

Military Moving Expenses, Broken Down.

With the new tax reforms, many people, except the military, do not qualify for moving expense deduction. 

For moving expense deduction to be valid, one needs to meet some time and distance tests. For members of the armed force on active duty, you are not subjected to these tests. For movement as a result of permanent reassignment, you qualify for the deduction. 

Using form 3903, you can deduct the unreimbursed moving expenses. By permanent reassignment, we mean the following:

  • A move from a permanent duty post to another

  • A move from your residence to the place of active duty

The military move should be within a year of the commencement of work to qualify.


Deducting Moving Expenses: How to go about this 

IRS form 3903 takes care of everything related to moving expense deduction. While this is a simple form, you need an expert's assistance to make sense of the form. On estimating the amount, you want to deduct; you will enter this in your income tax return, Line 26, and schedule 1.

You do not have to itemize deduction to qualify for this. This makes the deduction pretty valuable. It also brings down your Adjusted Gross Income.  This allows you to get other deductions.


What can You Deduct?

All expenses you want to claim must only be necessary expenses. There is a detailed tool on the IRS website, which explores what you can deduct. Many everyday items are on the list. Using the tool, here are some items you can deduct provided they are not reimbursed:

  • Expenses for lodging in your new place

  • Packing, transporting your items and personal effects

  • Connecting and disconnecting household utilities

  • Transporting your vehicles and pet

  • Expenses for storage 

  • Expenses for car transportation. This can either be the actual expense or standard deduction. 

  • Expenses for transportations other than vehicles

  • Insurance and storage cost of household items and personal effects. This, however, has to be within 30 consecutive days, the day after this stuff left your former house. It should also be before the items got delivered to your new place.

What you cannot deduct 

There are a few items that you feel should be deductible. These items, however, are not deductible. A few of these are:

  • Meals and entertainment while moving from your old place to your new place

  • You can only apply a temporary lodging deduction to a single day after moving from your old home. This applies to the day you traveled and a single day after arriving at your new home.


Costs Paid by the Military is Not Deductible 

Military personnel must account for every allowance intended to take care of moving expenses while deducting. The example below sheds more light.

You might have got a $2000 allowance to ship your vehicle while moving. In actual fact, you paid $2,500 for the shipping of your car. Both the total expense and reimbursement amount needs to be reported on Form 3903. This will translate to a $500 deduction for vehicle shipping expenses. 

The IRS has not supplied enough information that sheds light on Dislocation Allowance. Before it used to be excluded from reimbursement, you now use it to calculate out-of-pocket expenses. Your tax professional should be able to guide you on which decisions to go with. 

In summary, the moving expenses deduction is a useful tool that can help checkmate some expenses incurred in a move. You, however, need to follow the rules well. It applies only to the military personnel, and you cannot deduct whatever you spent on the journey. Besides, things you have been compensated for as well cannot be removed.



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