According to the IRS, you can deduct the expenses of moving your personal effects and household goods. That includes the cost of hauling a trailer, crating, packing, insurance, and in-transit storage.
You cannot deduct any moving expenses for purchasing items while traveling between your old and new addresses.
Military personnel can claim this deduction but must meet specific requirements to qualify. As a result, the average household for the 2022 tax year will not be able to pursue this deduction.
The Tax Cuts and Jobs Act Changed the Moving Tax Deduction
In 2017, Congress passed the Tax Cuts and Jobs Act. This legislation changed how people can claim moving expenses as tax deductions.
The legislation that took away the tax deduction for moving expenses is set to expire in 2025. If you need to amend a previous return or are in the military, you might still be able to make this claim if you have reasonable moving expenses.
IRS Form 3903 states that reasonable moving expenses can include the cost of any or all the following items.
- Mileage for the moving vehicle or your direct fuel costs.
- Rental truck lease agreements and short-term storage.
- Professional packing services, materials, and insurance.
If you manage the logistics of a long-distance move, you might be able to include the cost of staying at a motel or hotel on the way to the new address. But unfortunately, the IRS doesn’t allow you to deduct meals as an expense for this deduction.
In the first half of 2022, the IRS allotted a standard mileage rate of $0.18 per mile. It became $0.22 per mile in the second half of the year. If you are in the military and qualify for this deduction, you might find that tracking actual transportation costs might be more lucrative.
The actual costs include fuel, parking fees, vehicle fluids (oil, windshield washer cleaner, etc.), and tolls.
Form 3903 from the IRS must be an attachment to your 1040 for it to be included as part of your filing for the 2022 tax year.
How Do I Know If I Qualify for the Moving Expenses Tax Deductible?
The IRS requires everyone to pass two tests to see if they qualify for the moving expenses tax deduction. Time and distance minimums must be met before you can file Form 3903 with your 1040.
The timing of a move must be related to the start of new employment to qualify for the deduction. To be eligible, you must start your new job, work full-time for 39 weeks, and meet the standard within the first 12 months after moving.
If you start a new job months before your family joins you at the new home, you can still deduct moving expenses after your first day. Qualifying exceptional circumstances include a child finishing the school year near the previous address or someone requiring specialized medical care that isn’t immediately available.
The other test involves the distance between your old home and the place of your new employment. It would be best if you were 50 miles farther than your old home and previous employer to claim moving costs.
If you lived in a home 10 miles from where you worked, the new job would need to be at least 60 miles from the previous address to qualify.
Military members can claim moving expenses without meeting the employment or distance requirements, but they must make a permanent change in status to achieve this waiver. For most people, that means retirement or service termination.
Do I Use Form 3903 If I’m in the Military?
Anyone wanting to use the moving expenses tax deduction, including military members, should use IRS Form 3903.
- The shipping and storage costs associated with the move are listed on Line 1 of the form, including packing and moving expenses.
- If you have fuel, travel, or lodging costs to report, these items are listed on Line 2.
- Employer reimbursements for moving expenses are reported on Line 4, including any amount not included in Box 1 of your W-2 should also be listed on this line.
When looking at your W-2 for the year to verify these amounts, you should look at Box 12, Code P. You’ll see these directions listed on Form 3903.
Should your reimbursement exceed the out-of-pocket expenses you encountered while moving, you won’t be able to take the tax deduction. Anything extra would be reported as taxable income.
If your expenses were more than the reimbursement, you could claim the remainder of the costs after qualifying for the deduction.