Tax-Deductible Moving Expenses
Some moving expenses may, under certain circumstances, be deducted on your federal income tax return if you complete the appropriate forms.
The following information was prepared to help qualified people benefit from all allowable moving deductions. Should you have additional questions regarding your IRS, please contact the nearest Internal Revenue Service (IRS) office.
A Note on Self-Employment
If you are self-employed, you may deduct the aforementioned expenses if you already have made specific arrangements to operate your business at a new location. There is no cap on the maximum deduction allowed for moving household goods or for a family’s travel costs en route to destination.
Non-deductible moving expenses include the following:
- Meals while moving from your old location to new location
- Pre-move house hunting trips
- Temporary housing prior to moving into permanent housing
- Costs of selling, buying or leasing homes as a result of the move
- Deposits lost due to damage or neglected cleaning
- Deposits required when entering a new lease
- Home improvements
- Licenses for drivers and automobiles
- Lost club membership dues
- Loss on the sale of the home
- Mortgage penalties
- Real-estate taxes (instead of a moving expense, these taxes would be listed as an itemized deduction on Schedule A)
- Refitted carpets and draperies
How are Moving Expenses Reported?
Moving expenses are deductible only as an adjustment to gross income.
To support your claim for deductions, use IRS Form 3903 – “Moving Expenses” – which shows the type and amount of moving expenses incurred.
All reimbursements you receive in connection with your move, if deductible, will not be included in your gross income for the year in which they were paid to you. If not deductible, they will be included in your income. Your employer must furnish a detailed breakdown of any reimbursements paid to you as moving expenses.
If you are not reimbursed by your employer or if you are self employed, claim the deductible expenses “above the line.” That means you’ll take the deduction on Page 1 of Form 1040 rather than itemizing deductions as in the past.
If you use your automobile to move your household goods and/or your family to the new location, you can compute its operating cost in one of two ways:
- By keeping a record of actual out-of-pocket expenses for gas and oil that lists dates of travel and odometer readings or;
- By verifying the miles traveled with a list of dates and odometer readings, and deducting 10 cents per mile.
Add any parking fees and tolls to your travel and lodging costs.
General Information on Tax Deductible Moving Expenses
As for and keep dated receipts of all of your moving expenses as documentation in preparation of your income tax form.
If you have paid your moving expenses but haven’t met the 39-week residency requirement by the time your tax return is due, you can take the deduction now if you expect to meet the residency requirement. Or, you may omit the deduction and file an amended return (Form1040X) for a refund after you have met the residency test.
Keep all papers pertaining to your move that you received from the moving company, such as the Bill of Lading and an Additional Services Performed form, if any. They will be needed when you claim your tax deductions.
You might want to consult an accountant about how moving expense could affect your income taxes. If a company reimbursed your non-deductible moving expenses, this could increase your tax liability. You might want to consider altering your W-4 form now to have extra money withheld.
To help you file tax information on the sale of a home, request Publication 523 and Schedule D from the IRS. For more information on filing moving expenses, request from the IRS Publication 521 and Form 3903.
Tax forms and publications may be obtained by calling your nearest IRS office of the IRS Federal Tax Forms Service at (800)829-3676. They also may be obtained via the IRS website: www.irs.gov. In addition, libraries, banks post offices and other government offices often have some of the forms used for filing federal income tax returns.
Moving Expenses Checklist
Records pertaining to your move should be kept in one place and retained for at least three years. They include:
- Bill of Lading
- Additional Services Performed form
Travel Expense Receipts
- Personal transportation costs (air, bus or train fares, and/or automobile expenses)
IRS Tax Forms and Information
- W-2 Wage and Tax Statement (from employer)
- 4782 Employee Moving Expenses Information (from employer)
- 1040 U.S. Individual Income Tax Return
- Schedule A – Itemized Deductions
- Schedule D – Capital Gains & Losses
- Form 3903 – Moving Expenses
- Publication 521 – Moving Expenses
- Publication 523 – Tax Information on Selling Your Home
- Publication 530 – Tax Information for Homeowners
- Publication 553 – Highlights of Tax Changes
To order federal tax forms and publications, call your nearest IRS office or (800) 829-3676. Some of these forms and publications may also be available on the IRS website: www.irs.gov. Questions may be directed to your local IRS office or the national office at (800) 829-1040.
IRS Publication 553, “Highlights of Tax Changes,” is available in January of each year. We recommend that you obtain a copy of this publication to determine if changes have been made in allowable moving expense deductions.
If you are a member of the armed forces or a civilian moving outside the United States, contact your tax adviser for specific information on qualifying for and claiming moving expenses.
*Holman Moving Systems does not advise on any personal income tax requirements or issues. Use of any information from this site or any other web site referred to is for general information only and does not represent personal tax advice either expressed or implied. You are encouraged to seek professional tax advice for personal income tax questions and assistance.