What Are Moving Expenses?
Moving expenses are potentially tax-deductible expenses that are incurred when an individual and his or her family relocate for a new job or due to the location transfer of an existing job. After certain baseline criteria are met for time and distance, individuals used to be able to deduct qualifying expenses for roughly one year after beginning the new job. The Tax Cuts and Jobs Act of 2017 eliminated this deduction for tax years 2018 through 2025, except for members of the military on active duty who move as the result of a military order.
For members of the military who still qualify, here is how the tax deduction for moving expenses works.
Basic categories of qualifying expenses include costs to pack and ship personal possessions, temporary storage fees, and transportation costs. Sometimes companies will pay for the relocation of its employees or new hires. However, there is often a cap on the amount.
Understanding Moving Expenses
The key phrase to consider (at least in the eyes of the IRS) is "reasonable costs" for moving yourself and your property. These costs include a moving van, storage unit, and temporary insurance used in travel. Some expenses that are generally not deductible include house-hunting trips, meals during the move, and the costs involved in selling an existing home.
If you are traveling by car to your new job location, the IRS states:
"If you use your car to take yourself, members of your household, or your personal effects to your new home, you can figure your expenses by deducting either:
- Your actual expenses, such as the amount you pay for gas and oil for your car, if you keep an accurate record of each expense, or
- The 2018 standard mileage rate of 18 cents a mile.
Whether you use actual expenses or the standard mileage rate to figure your expenses, you can deduct the parking fees and tolls you pay to move. You can't deduct any part of general repairs, general maintenance, insurance, or depreciation for your car." People wishing to claim these deductions should keep good documentation of all potentially qualified expenses.