How Moving May Affect Your Taxes


Tax season is upon us. While in previous years, you were able to deduct certain tax expenses if you moved for career-related reasons, the passing of the Tax Cuts and Jobs Act (TCJA) introduced significant changes in claiming deductibles. Read on for how the Tax Cuts and Jobs Act changed how moving may affect taxes.

IRS Tax Form 3903

Prior to 2018, if you wanted to claim tax deductions on your moving expenses related to starting a new job, you would use the IRS Tax Form 3903. Employer reimbursements would not qualify for deductions. While this deduction had no limits, you did have to meet a few eligibility requirements.
Active duty members of the U.S. military were exempt from these requirements if they relocated due to a station change.

  • Time requirement. To qualify for deductions, the timing of your move had to relate closely to the time you started the job. Generally, you must have worked for 39 weeks full time within 12 months after the move. Any date of the year would qualify if it was within the 12-month period. There were two other exceptions: If your family moved after the job date because of special circumstances, like hospitalization or school or if you worked outside the United States, then moved back for retirement.
  • Distance requirement. In order to qualify, your new job location must have been at least 50 miles farther away from your old home than the distance between your old home and your previous job.
  • Qualifying expenses. The moving expenses that qualified for deductions included the costs of gas, mileage, boxes, rental vehicles, and storage, as well as hotel lodging on the way to the new location. Travel costs such as parking fees, and tolls would also count, but not meals.

Tax Cuts and Jobs Act

Since the Tax Cuts and Jobs Act went into effect, it has impacted the taxes you would pay and deduct for the year 2018.
Under this new law, you can no longer make any deductions for career-related moving expenses. Employer reimbursements are still possible, and your employer will still report them as income on your W-2.
The only people exempt from the new act are members of the U.S. military. They can make the same moving deductions as before.

The TCJA and its effects are not permanent. Unless future legislation eliminates it or extends it, the act will expire by the end of tax year 2025. Moving expenses may be deductible beyond 2025.

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