Are moving expenses tax deductible in 2018/2019? And if so, who is eligible to receive them? Moving of America is here to look into new changes in the tax law to help you explore how it impacts deductible moving expenses this year.
In the past, when you were relocating to start a new job, you had a chance to deduct some of your moving costs. Now, you must learn more about the latest tax rules and regulations regarding moving expenses. In accordance with past law, you could deduct the cost of hiring movers and other moving expenses. Now, thanks to The Tax Cuts and Jobs Act, taxpayers will no longer be able to claim a deduction on moving expenses in 2018-2025. But, there is good news.
- If you moved for a new job in 2017, some of your moving expenses are still deductible.
- For all of you that moved in 2018/2019, find out more about deductible moving expenses and its limitations in this article.
We will give our best to provide you with the answer you are looking for. Are moving expenses tax deductible? Yes and no. Keep reading for more information.
Not All Moving Expenses Qualify for Tax Deduction
If you read the intro carefully, you know that the deduction of moving expenses for a new job is no longer allowed in the time frame of 2018-2025. But, if you moved for a better career in 2017, you can still qualify for a tax return. One important fact here is that members of the US military are still able to deduct moving expenses. Just because you moved in 2017, this does not necessarily mean you can deduct moving expenses. Expenses that qualify for tax deduction include packing and shipping your household goods and personal property, and costs for traveling. However, meals aren’t deductible as part of your moving expenses.
You must meet specific criteria to apply for a tax deduction. We bring you a few factors that can give you a general idea about who can qualify for tax deduction.
- The time frame
If you want to meet the criteria for moving taxes deduction, you must start working at your new job within a year of relocating to a new address. You can move before or after your new job starts; it is only essential that the job start date and the moving date are within 12 months of each other. Remember that this applies to people who moved in 2017.
There is, however, one exception to this time frame rule. People who work outside the USA, and then relocate back to retire can deduct their moving expenses.
- The distance to the new job
Your new job should be at least fifty miles away from your old address. This is a rule you should remember: If your new job is only twenty miles away from your old address, you will not be allowed to deduct the moving expenses.
Like the previous rule, this one also has an exception. Members of the US military can deduct moving expenses even if they don’t meet the distance test.
- Length of New Job
In the year when you are relocating, you must work for a minimum of 39 weeks at your new job, if you want to apply for moving expenses deduction.
IRS moving deductions are no longer allowed in 2018/2019
In accordance with the Tax Cuts and Jobs Act, new tac law states that the moving expenses deduction is no longer allowed. Once again, this does not apply to members of the US military. Also, the Tax Cuts and Jobs Act suspends the above exclusion from income for qualified moving expense reimbursements from an employer. According to IRS: “employers will include moving expense reimbursements as taxable income in the employees’ wages.”
Members of the US military are an exception to this rule
This new tax law is terrible for most taxpayers because they will lose the benefits of moving tax deduction. But, there is an exception when it comes to active military members. The suspension of tax-deductible moving expenses does not apply to them.
To sum up, what does the new tax law mean for people moving in 2018/2019?
As you can probably presume, if you are not an active member of the US Military, you will not be able to deduct your moving expenses from your federal income taxes.
Fill out the proper forms on your 2017 tax return.
You can still claim a deduction on your 2017 Tax Return. If you moved in 2017 and you qualify for moving expenses deduction, fill out IRS Form 3903 and also line 26 on Form 1040. Here is a general guideline how to do it properly:
- Add shipping and storage costs to line 1 on Form 3903
- Add travel-related expenses to line 2 on Form 3903
- If your employer paid any stipends for moving, enter that figure on line 4 on Form 3903
Without tax deductions in 2018/2019, how can you save money while moving?
Because moving expenses from 2018/2019 are no longer tax deductible, you need to find other ways to save some money while moving. Luckily for you, there are many affordable and reliable moving companies such as Moving of America who can fit inside your budget and meet your relocation needs. With a licensed and insured moving company, you can be sure your belongings are in good hands. Dependable movers will offer you affordable relocation packages, but you can also find some other ways to save money when moving. Here are some tips to make an affordable move.
- Get free cardboard boxes
Instead of buying new ones, you can find free moving boxes in near grocery and liquor stores. Many store owners will be thrilled to get rid of leftover boxes. Make sure to pick boxes in good condition. They need to be clean and dry to avoid damages on your goods.
- Move during the off-peak season
Make sure to move during the off-peak season. Avoid moving during the summer, weekends and holidays. The summer and weekend move is usually more expensive than move during the fall and winter. We also suggest you move in the middle of the week and the mid-month days.
- Ask friends for help
If you are not capable and skilled to pack everything yourself, ask your friends to help. You don’t have to pay for professional packing assistance, instead, try to do it with your friends.
- Arrange a yard sale and sell items
The more items you want to move, the more expensive your move will be. Think about arranging the yard sale so you can sell all your unnecessary items. You will get rid of the used stuff, and also you will earn some extra money for your relocation.