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Moving expense deductions explained
Before 2018, it was pretty common to deduct expenses that you incurred when moving for a job. However, that all changed with the 2017 Tax Cuts and Jobs Act, which stated that only military members could claim moving deductions. There is some good news, though. The bill may not be permanent, and there may be ways to get deductions on your state taxes. Take a look at the current 2021 tax regulations, find out how to deduct expenses if you’re military and learn more about getting every discount you can if you’re not.
What changed with moving expense tax deductions?
The Tax Cuts and Jobs Act of 2017 was designed to simplify individual federal income tax. While it nearly doubled the standard deduction for most U.S. citizens, it eliminated some deductions, including moving expenses. It also changed the way you claim relocation reimbursement. Now, you have to claim any compensation for your move, including bonuses and relocation packages, as income. The bill outlined the tax cuts through 2025, so those rules are in place for at least a few more years.
Filing back taxes?
The change went into effect in 2018, so if you’re filing back taxes for 2017 or before, you can deduct moving expenses (as long as your move meets specific criteria for timing and distance).
Deductions for active-duty military
Active-duty military members who move for a permanent change of station are still eligible to claim the following unreimbursed moving expenses on their federal taxes using Form 3903:
- The moving company, including packing, transportation and moving labor
- Shipping your car or pets
- Disconnecting and connecting utilities
- Travel, by car (either exact costs for gas and oil or the 2021 standard mileage rate of 16 cents per mile), airline or train tickets
Other possible moving deductions
While most Americans won’t be able to claim anything from their move on their federal taxes, some states allow deductions on state filings. You may be able to itemize your moving expenses or exclude compensation from income in the states below. Keep in mind that state rules can vary, so check out the linked forms or guides to see if you qualify:
How to save on your move if you can’t claim it
If you’re still in the planning stages, there are a few things you can do to make sure you spend the least amount possible on your move since it’s all coming out of pocket.
- Do as much of the work as you can. Packing and loading aren’t line items anymore, so going DIY (or doing as much as possible) will save you in the long run. An option like U-Pack® is a great middle ground. You do the packing and loading, but we do all the driving — at prices comparable to full DIY options like truck rental.
- Make as few trips as possible. Before 2018 you could claim multiple trips, but since that’s not an currently an option, it’s best to take care of things like job interviews and house shopping during the same trip to cut back on spending.
- Compare options. Get quotes from several different companies to find the best rates. Interested in getting a quote from U-Pack? Find out what makes us one of the cheapest ways to move.
Preparing to file
The deadline to submit 2021 federal tax returns is Monday, April 18, 2022. Some states may have different due dates, so check with your Department of Finance to ensure everything gets turned in on time.
Still wondering if you qualify to claim moving expenses? The Internal Revenue Service has a helpful quiz to determine whether you are eligible to deduct anything relating to your move.
If you have any questions, we recommend contacting a tax professional, online tax preparer or the IRS.
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