Before 2017, the answer to “Are moving expenses tax deductible?” was an unqualified “Yes.” Thanks to the Tax cuts and Jobs Act of 2017, though, the answer has changed significantly. Now, most people cannot deduct any of their moving expenses.
However, the law does still allow some deductions in limited circumstances. Knowing what those deductions are might be able to help you save some money during your move.
Good Military Moves
One of the biggest exceptions to this law is members of the military. If you are active-duty military and have had to move due to receiving orders to transfer stations, you can deduct your moving expenses. If a military member is imprisoned, deceased or deserted, their spouses and dependent children may also quality to deduct moving expenses.
Helping Out Businesses
The 2017 act also gives certain businesspeople an exemption. If you’re a small business owner, for instance, you may deduct your moving expenses if you have moved as part of the process of starting a new business.
Certain exemptions also exist for people who are working abroad. If someone working abroad has died, the surviving family members may deduct their moving expenses. People who have worked abroad and are retiring and moving back to the United States may also deduct their moving expenses, as well as people who have lost their job abroad due to a disability.
However, if you own your own business and you and your business both move, then you may also deduct your business moving costs, such as moving business equipment and inventory.
What can You Deduct?
If you happen to fall into one of these categories, you’ll have to keep in mine that only costs directly related to your move can be deducted, such as:
- Shipping a car or other vehicle
- Motel or hotel costs while you’re traveling to your new home
- Parking costs
- Cost of renting storage space for your items for up to 30 days
- Cost of shutting down utilities at your old home
- Cost of travel for yourself and your family
- Moving van rental fees
- Moving company rental fees
Keep in mind that when they say directly related, they mean it. Expenses like meals you ate while moving, any side trips you take while traveling and trips before or after you move are not deductible.
Think About Time and Space
Finally, your expenses have to pass three more tests having to do with distance and time.
First, you must have moved to your new home either 12 months before or 12 months after you started working at your new workplace.
Second, your new work location has to be more than 50 miles from your previous home than the location of your old job. For example, if your old job is 20 miles away from your old house, and your new job is 60 miles away, you won’t get to deduct your expenses because 60 – 20 is 30, which is under the 50 mile requirement. If your new job is 100 miles away, on the other hand, you’ll be able to claim the deduction, since 100 – 20 is 80, which is over 50 mile requirement.
Finally, you’ll have to have worked for an employer for at least 39 weeks in the year after you’ve moved to get the deduction. The weeks don’t have to be consecutive, though, and you can even work for another employer.
If you are self-employed, though, the rules are a little stricter. You’ll need to work for at least 39 weeks in the year after you’ve moved to your new home, and work for an additional 78 weeks over the next two years. It’s worth noting that active-duty military don’t need to meet this requirement.
Prepare for Your Move With First Alliance Credit Union
While most people won’t be able to deduct their moving expenses, there are still some people who may qualify. Knowing if you qualify can help you lower your moving budget and save money that can be put to better use elsewhere.
