Moving can be expensive, especially if you’re forced to move for a new job. Prior to tax year 2018, the IRS granted a deduction for certain types of moving expenses associated with a change of address. However, that deduction vanished thanks to provisions in the Tax Cuts and Jobs Act, passed in December 2017. Now, any moving expenses that aren’t reimbursed by your employer are your own personal responsibility, with no deduction allowed. The only exception is if you are a member of the military and are required to move.
Moving Expense Deduction Prior Provisions
As the law currently stands, the moving expenses deduction will be suspended for the duration of the TCJA, which is being enforced from 2018 through 2025. This applies to state tax deductions as well, which are modeled on federal legislation. However, legislation is often overturned or rescinded, or in this case, slated to expire for tax year 2026, so it can be helpful to understand the prior provisions.
Up until tax year 2018, you could deduct all of your qualifying moving expenses if you passed two tests, one for distance and one for time. Here’s how the distance and time tests worked:
- Distance Test: The distance test required your new place of employment to be at least 50 miles farther from your home than your prior job.
- Time Test: The time test required full-time work for at least 39 weeks within the 12 months after you moved. Some seasonal work was allowed, such as teaching, if the work contract covered an off-season period of fewer than six months.
Expenses that were considered “qualifying” were travel expenses such as lodging, gas and oil, and the standard mileage rate for distances driven, as computed by the Internal Revenue Service. Other non-travel expenses such as short-term storage also qualified.
Related: Money Traps to Avoid When Moving
Military Exemption for Moving Expenses Deduction
If you’re forced to move due to a job in the military, the exemption still stands, even for tax years 2018 and beyond. Members of the military can also qualify for the exemption more easily. Specifically, a member of the military doesn’t have to meet the time and distance tests if the move is a “permanent change of station,” defined as one of the following:
- A move from home to the first active duty post
- A move from one permanent duty post to another
- A move within one year from the last post of duty to home, or to somewhere nearer in the United States
Military members meeting these requirements can still fill out and claim a deduction using Form 3903. Bear in mind, however, that any moving expenses reimbursed by your employer might appear as taxable income on your W-2. In this case, you might want to adjust your withholding tax so you aren’t hit with an unexpected tax bill at year-end.
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