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Are Moving Expenses Tax Deductible?

Until 2018, individuals could deduct moving expenses on federal income taxes. However, the Tax Cuts and Jobs Act passed by Congress eliminated this deduction except for military members who meet certain requirements.

It’s important to note that the tax deduction was only temporarily removed, although that removal lasts through 2025. However, Congress’ intention was to help make up for removal of that deduction by lowering the overall tax rates and doubling the personal exemption, among other moves.

Who Qualifies in 2018

For 2018, active duty members of the U.S. Armed Forces can claim moving expense deductions if the move occurred because of a permanent, military-ordered reassignment to a new station. According to tax experts H&R Block, some of the moves covered include:

  • Moving from home to your first military post for active duty
  • Moving from one permanent post to another
  • Moving from home to your first military post for active duty
  • Moving from your last military post to your home or “to a nearer point in the United States.” This move must occur within one year of leaving active service.

Deductions can include those for packing, crating, storage (for 30 days) and insurance. It’s also allowable to deduct travel costs from the old location to the new one, including lodging, car expenses and airfare.

For moves to other countries, storage and other expenses also can be deducted. However, this covers only moves from the U.S. to another country or between foreign countries, not from other
countries to the U.S., according to H&R Block.

What If You Moved in 2017?

One issue that has come up is that many people may have moved late in 2017, but not paid the moving costs or been reimbursed for the move by an employer until 2018.

In  Notice 2018-75, the IRS rules that such moves still qualify for the exemption. This involves the ability to deduct the moving costs as well as the ability to not have employer compensation for moving costs counted as part of your income.

There are some eligibility requirements. They include the following, according to the IRS.

The move must have been work-related. Keep in mind that this includes both transfers with one company, moving from one company to another and can even include the self-employed under certain circumstances.

The move must involve a new main location that is at least 50 miles farther from your former home than your old job location was from your former home. Typically, this means you would have relocated from one city to another, as a move from the city to the suburbs or between suburbs probably cannot meet the distance test.

The move must also meet “the time test.” The IRS requires working at the new full-time job at least 39 weeks in the first year after the move. The IRS notes that these weeks do not have to be consecutive nor do they have to all have been worked for the same employer.

These are some of the rules governing getting tax exempt status for moving costs. While that will be eliminated for most people in 2018, you can still take advantage of them if you moved in 2017 and has associated financial transactions in 2018, or if you are an active-duty member of the military who meets the requirements.

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