Posted by Elliot Kravitz, ATP

Moving Expenses: Are they Tax Deductible?

Moving Expenses: Are they Tax Deductible?

For people that relocated to start a new job, they can deduct moving expenses. This deduction is available for people in the military. 


Rules for Military Qualification 

Military members on active duty can claim their deduction for moving expenses in the 2018 tax year and beyond. This includes moving from your residence to your post, or from a post to the other, or from your last post to your place of abode. 

Expenses that the government reimburses cannot be claimed, and the duration for the claim is a single year if the movement is to end your job. It covers expenses related to household members if the relocation is in your absence due to your death.

Here are some examples of moving expenses that are deductive: moving cost of your house stuff, accommodation while on the trip. It only covers "reasonable" expenses without meals.

The rules guiding military member qualification for this deduction are similar to those which guided other taxpayers prior to 2018. Members of the military must move within a year of ending their work. 


Expenses that do not Qualify 

You cannot deduct the extra miles if it is possible to get to your destination using a direct or short route, but you choose to go through a long road. Also, you will not get a deduction for side trips like sightseeing or other personal stuff.

Here are other expenses that do not qualify:

  • The cost of selling or buying a home, which includes the price you got a new home

  • Lease expenses and security deposits

  • The cost of a driver's license and the registration of a new automobile in a new state.

  • Whatever expense you incur if you have to return to your former house for any reason after moving. 

  • Charges for storage on getting to your new place of abode; with the exception of foreign moves


Rules for other Taxpayers 

You do not have to serve in the military before claiming this deduction, provided you moved in 2017 and meet the test. 

Moving expenses that qualified before 2018 are costs that you incur from packing, storing, and shipping your household stuff; lodging and travel costs. You also cannot deduct meals and side trips does not count. 

Here are three tests that one must meet to claim the deduction for moving expense:


Test 1: Closely Related to Work Commencement 

This means your relocation needs to be within a year of the time you initially reported for work at your new job's location. For instance, you moved from Hawaii to DC on June 1. You commenced work in DC on September 1. Since you commenced work within a year, you have passed the starting work test. 

This rule comes with an exception: people not working in the US that are retired and relocated back to the US can deduct all expenses for moving even though they are not relocating to commence a new job. 


Test 2: The distance test

Your new job's location must be farther than your former residence for at least 50 miles compared to where your old job was. 

This involves measuring the distance between your new workplace and your previous home, which we will call X. You will also measure the distance between your old workplace and your previous home, and we will call this Y. The provision for the move to meet the distance test is if measurement X is at least 50 miles greater compared to Y. 


Test 3: Another Time Test 

To satisfy the third test, you need to have worked for a relatively long time at your new location.

  • You are a full-time worker for 39 weeks at least, for a year after your move.

  • You are self-employed, and you worked full time for 39 weeks in the first one year after the move and at least 78 weeks for the next two years after your move. 

These rules come with a couple of exception:

  • The rule does not bind people who worked overseas and relocated to the US.

  • People who couldn’t continue working at a new location due to disability 

  • People who had to move to a fresh location at a request from their employer and people who lost their job for any reason asides from willful misconduct do not have to meet the test.


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Elliot Kravitz, ATP
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