Summertime is a popular season for moving, as the warm weather and school breaks make it an ideal time to relocate. However, the costs associated with a move can quickly add up, leaving many wondering if they can deduct any of these expenses come tax season. In this extensive guide, we’ll explore the ins and outs of claiming moving-related deductions, helping you maximize your tax savings and help ensure a smooth transition to your new home.

Understanding the Tax Landscape for Moving Expenses

In the past, taxpayers could deduct certain moving expenses on their federal tax returns, provided they met specific criteria. However, the Tax Cuts and Jobs Act (TCJA) enacted in 2018 brought about significant changes to the tax landscape, significantly limiting the availability of this deduction.

The Impact of the TCJA on Moving Expense Deductions

The TCJA effectively eliminated the moving expense deduction for the majority of taxpayers, with one notable exception: active-duty members of the armed forces. This change was implemented from 2018 through 2025, after which the law is scheduled to revert to the previous tax rules, allowing all taxpayers to once again claim eligible moving expenses.

The Exception for Active-Duty Military Personnel

For active-duty members of the military who are relocating due to a permanent change of station, the moving expense deduction remains available. This means that these individuals can still deduct the costs associated with packing, shipping, and transporting their belongings, as well as any temporary storage and lodging expenses incurred during the move.

Qualifying for the Moving Expense Deduction

To be eligible for the moving expense deduction, you must meet the following criteria:

Active-Duty Military Status: You must be an active-duty member of the armed forces, including the Army, Navy, Air Force, Marines, or Coast Guard.
Permanent Change of Station: Your move must be due to a permanent change of station, such as a transfer to a new military base or post.
Timing of the Move: Your move must take place within one year of your permanent change of station orders.
Distance Requirement: Your new job location must be at least 50 miles farther from your former residence than your previous job location was from your former residence.

If you meet all of these requirements, you can proceed to claim the moving expense deduction on your federal tax return.

Deductible Moving Expenses

For active-duty military members who qualify for the moving expense deduction, the following expenses can be claimed:

Transportation Costs

Airfare or mileage for driving to the new location
Rental truck or moving van expenses
Fuel and oil costs for driving your personal vehicle

Packing and Shipping Expenses

Packing materials like boxes, tape, and bubble wrap
Professional packing and loading services
Shipping or transporting your household goods and personal effects

Temporary Storage and Lodging

Up to 30 days of storage for your belongings if your new home is not yet ready
Lodging expenses incurred during the move, such as hotel stays

It’s important to note that you can only deduct the costs you have not been reimbursed for, as any expenses covered by your employer or the military cannot be claimed on your tax return.

Claiming the Moving Expense Deduction

To claim the moving expense deduction, you will need to file IRS Form 3903, “Moving Expenses,” when submitting your federal tax return. This form will allow you to report the total amount of your eligible moving expenses, which will then be used to reduce your overall adjusted gross income (AGI).

Documenting Your Moving Expenses

It’s crucial to keep detailed records of all your moving-related expenses, including receipts, invoices, and any relevant documentation. This will ensure that you can accurately report your deductible costs on Form 3903 and maximize your tax savings.

State-Level Considerations

While the federal government has largely eliminated the moving expense deduction for most taxpayers, some states may still offer a deduction on your state tax return. Be sure to check the rules and regulations in your state, as you may be able to claim these expenses even if you don’t qualify for the federal deduction.

Maximizing Your Tax Savings

Regardless of whether you qualify for the moving expense deduction, there are other ways to potentially save on your taxes during and after a summer move. Consider the following strategies:

Deducting Home-Selling Expenses

If you sold your previous home as part of your move, you may be able to deduct certain expenses related to the sale, such as real estate agent commissions, title insurance, and legal fees.

Claiming the Home Sale Exclusion

If you meet the eligibility requirements, you may be able to exclude up to $250,000 (or $500,000 for married couples filing jointly) of the capital gains from the sale of your previous home.

Deducting Mortgage Interest and Property Taxes

As a new homeowner, you may be able to deduct the interest paid on your mortgage, as well as your property taxes, subject to certain limitations.

Conclusion

While the Tax Cuts and Jobs Act has significantly reduced the availability of the moving expense deduction, active-duty members of the military can still take advantage of this tax-saving opportunity. By understanding the eligibility requirements and the types of expenses that can be claimed, you can ensure that your summer move is as tax-efficient as possible. Remember to keep meticulous records and explore all potential deductions and credits to maximize your tax savings and start your new chapter on the right financial footing.