You may qualify to use IRS Form 3903 to claim the cost of your moving expenses as a deduction on your federal income tax return. The IRS allows taxpayers to deduct eligible moving costs.
The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
If you moved to a new location because of work this year, you may qualify to use IRS Form 3903 to claim the cost of your moving expenses as a deduction on your federal income tax return. The IRS allows taxpayers to deduct eligible moving costs from the taxable income they report on Form 1040.
This deduction is not subject to any limits, so you can claim all of your qualified moving costs if you meet the eligibility requirements. While moving expenses you pay yourself are deductible, expenses that your employer reimburses you for are not eligible for the deduction.
Meeting the time test
The timing of your move must be closely related to the start of your new employment in order to qualify for the tax deduction. To meet this standard, you’ll have to start your new job and work full-time for at least 39 weeks within the first 12 months after your move.
There is an exception: If you start your new job months before your family moves to the new location because of special circumstances, such as a spouse who is receiving medical care or a child who is finishing school near your old home, you can still deduct your moving expenses despite the fact that your move occurs long after your first day of work.
Meeting the distance test
Another requirement involves the distance between your new workplace and your old home. To claim your moving costs, your new place of employment must be at least 50 miles farther away from your old home than your old place of employment. As an example, if you lived in a home that was 20 miles away from your old job, you’ll have to take a job at a new company that is at least 70 miles away from your old home to qualify for the deduction.
Members of the United States military can claim their moving expenses regardless of the distance or employment requirements if they are making a permanent change in their military status such as retirement or termination of service.
All of the expenses you claim must be both reasonable and necessary to your move. Reasonable moving expenses may include the cost of gas or the mileage on your vehicle, rental trucks, short-term storage, and boxes. For a long move, you might include the cost of lodging at a hotel on the way to your new home.
The IRS allots a standard mileage rate that you can use to calculate your travel expenses, but if you prefer, you can keep up with your actual transportation costs and deduct those instead. Eligible travel costs include gas, oil, parking fees, and tolls.
Completing Form 3903
Shipping and storage costs go on line 1 of Form 3903. Travel, lodging, and gas costs go on line 2. Reimbursements from your employer for any moving expenses, are reported on line 4.
If your reimbursement exceeds the total of your out-of-pocket expenses, you won’t be able to deduct your moving expenses and you’ll have to claim the excess reimbursement as taxable income. However, if your personal expenses were more than the amount your employer reimbursed you, you can deduct your out-of-pocket moving expenses to reduce your taxable income.
Remember, when you use TurboTax to file your taxes, we’ll ask simple questions about your job change and your move, and tell you which moving expense deductions you qualify for. We’ll fill in Form 3903 behind the scenes and handle all the calculations for you.
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