Are Moving Expenses Tax-Deductible?

Trying to get through a move in this freakin’ economy without going over budget is like steering a boat through an ocean full of hungry sharks.

The moving costs you think you’ve planned for suddenly balloon out of control while unexpected expenses lurk just below the surface . . . they lie in wait, ready to take a huge bite out of your savings. All you want is to move your stuff across town without breaking the bank, for crying out loud!

So, if you’re looking for ways to save after going through a move, you might be wondering which moving expenses are tax-deductible and who qualifies for those deductions. Let’s take a look.

 

Are Moving Expenses Tax-Deductible?

Okay, we’ve got good news and bad news when it comes to who can deduct moving expenses and what kind of expenses qualify.

Let’s rip the Band-Aid off. Here’s the bad news: Congress passed the Tax Cuts and Jobs Act in 2017, which put a hard stop to claiming moving expenses for the vast majority of Americans.

Before 2018, you could usually deduct eligible moving expenses (like supplies, rental trucks, temporary storage, and even hotel rooms if you were moving long distance) on your federal taxes.

But if you’re in the military or part of a military family, we have good news for you:

Who Can Still Deduct Moving Expenses?

Since 2018, the only people who can still claim moving expenses on their federal taxes are:

• Active-duty members of the military who move (either inside the U.S. or to a foreign country) due to a change of station or military order
• The spouse or dependent of an active military member who has to move due to a change of station or military order
• The spouse or dependent of a military member who has died, been imprisoned, or deserted¹

Moving Deductions on State Taxes

Since the Tax Cuts and Jobs Act as passed by Congress in 2017, the majority of folks no longer qualify for moving deductions on their federal taxes. And many of the states that used to allow residents to deduct moving expenses on their state returns (like Georgia, Idaho, Ohio, Oregon, West Virginia, and Wisconsin) decided to do away with that deduction starting in 2018 as well.

But there are at least three states that still allow residents to deduct moving expenses on state taxes:

• Arizona
• Kentucky
• Virginia²

Keep in mind that state tax laws change all the time, so it’s never a bad idea to connect with a tax expert and let them double-check your state’s most current rules about deducting moving expenses before Tax Day rolls around.

What Counts as a Qualified Moving Expense?

If you’re one of the lucky few able to deduct moving expenses, we have good news! Uncle Sam considers almost any kind of expense or fee you pay during the moving process to be a moving expense. Here are some examples:

• Packing supplies (boxes, tape, bubble wrap, cloths, tarps)
• Temporary storage
• Moving trucks
• Professional movers
• Cleaning supplies and professional cleaning services
• Moving insurance
• Gas or mileage if you drive; airfare if you have to fly
• Hotel stay on the way to your new home (if you’re moving long-distance, for example)³

Add all those expenses up and it could save you a lot of money on your taxes! But let’s take a look at what kind of moving costs you can’t claim.

What Doesn’t Count as a Qualified Moving Expense?

Any of your moving fees or expenses that are covered by government reimbursements or paid for by the government can’t be deducted on your return (this mainly applies to military folks who are relocating for their jobs).

Don’t settle for tax software with hidden fees or agendas. Use one that’s on your side—Ramsey SmartTax.

Here are some of the other fees or expenses associated with moving that you can’t claim:

• Any part of the purchase price of your new home
• Expenses of buying or selling a home (think home inspections, closing costs, mortgage fees)
• Home improvements to help you sell your home
• Real estate taxes
• Appraisals
• Loss on the sale of your home
• Meals or food you purchase during a move
• Cost of storage from before or after your move (if you have to store extra furniture or belongings after moving to a smaller home, for example)⁴

How to Deduct Your Moving Expenses

If you or your loved one is a member of the military (thank you for serving our country, by the way!) and you’re eligible to claim moving expenses on your federal taxes, you can deduct them by filling out tax Form 3903: Moving Expenses and attaching it to your return.⁵

As far as tax forms go, this one is pretty short and straight-forward. In fact, there are only five lines to fill out:

• Line 1: Total of qualified shipping and storage costs.

• Line 2: Total of qualified travel costs (including lodging) from your old place to your new home.
• Line 3: Add lines 1 and 2 together.
• Line 4: Total amount of government reimbursements you’ve received for those items you’ve claimed in lines 1 and 2 (you should see this amount in box 12 of your Form W-2).
• Line 5: Determine if the total amount of government reimbursements you’ve received (aka line 4) is greater or less than the total amount you calculated in line 3.

If line 4 is greater than line 3, you cannot deduct your moving expenses. Uncle Sam already considers those expenses paid back by the government, so you can’t deduct them from your taxes. And if you received a greater reimbursement amount than the total of your qualified expenses (line 3), you’ll have to report that difference on Form 1040, line 1h.

If the amount on line 4 is less than line 3, subtract the difference. This is the amount of your moving expense deduction. You’ll enter it on line 5 of this form (Form 3903) and on Form 1040, line 14.

Just make sure you have all your related receipts and paperwork organized and ready to go. You never know when the IRS might have a question about your deduction or return.

And if you need help with Form 3903, don’t sweat it! A tax pro can answer any questions you have about which expenses qualify and help make sure your calculations are correct.

Save More on Your Taxes

If you’re in the middle of packing or figuring out the logistics of moving across the country, the last thing you want is to spend a bunch of time on your taxes. But working with a tax advisor like one of our RamseyTrusted tax pros could be a game-changer for how much you could save on your taxes this year.

Our tax pros know the tax code and can help you figure out which tax deductions and credits you qualify for. After all, every penny saved counts when you’re moving to a new home!