Are Moving Expenses Tax Deductible?
Moving expenses are deductible only for members of the military. Before the 2018 tax year, many people moving for work qualified for a relocation tax deduction. Now, if you answer yes to one of the following questions, you can deduct your moving expenses:
- Are you an active-duty member of the Armed Forces who moved for a permanent change of station?
- Did you recently retire from active duty and move within one year of that retirement?
- Are you the spouse or dependent of an active duty sponsor who died, deserted, or got imprisoned?
If you don’t meet IRS guidelines, you probably can’t deduct your moving expenses. One exception? If you moved for work before 2018 and didn’t deduct those moving expenses, you may be able to get that deduction now. But in that case, you should definitely speak with a tax professional.
In fact, reach out to a tax professional with any questions about your specific situation. Although we dug into IRS moving expenses deduction policy, we’re not tax pros.
If you answered yes to one of the questions, keep reading to find out which moving expenses are deductible and how to deduct them.
Which Moving Expenses Are Tax Deductible?
Deductible Moving Expenses
You can deduct costs that involve the basic packing and transportation of your household belongings, like:
- Packing or crating
- Insurance (30 days)
- Storage (30 days)
You can also deduct travel expenses like these:
- Car expenses
Nondeductible Moving Expenses
You can’t deduct any of the following moving expenses:
- Any expenses that the government has reimbursed you for
- The value of services the government provided (like a housing or lodging allowance)
- Costs of meals while traveling
- “Lavish and extravagant lodging”
- Any expenses related to the sale, purchase, or rental of your home (like home improvements, mortgage fees, or security deposits)
- Money you lose from moving (breaking a lease, ending club memberships, etc.)
- Traveling and long-term storage fees that do not directly relate to the move
How Do I Deduct Moving Expenses?
Deducting moving expenses isn’t hard, but it does take a little math.
You’ll need IRS Form 3903 to apply for your moving expense deduction. If you have multiple deductible moves, use a separate form for each move. You should have a Form W-2 from the government that you’ll want to keep handy.
Got those? Then here’s how to get your moving expense deduction:
Step 1: Calculate Your Deductible Moving Expenses
Figure out the total deductible costs of your move. Split this cost into two categories:
- Transportation and storage of your belongings
- Travel for your household (not including meals)
If you traveled by car, you can calculate your actual out-of-pocket expenses for gas and oil. Keep receipts for accurate accounting. Or you can use the IRS’s standard mileage rate ($0.22 per mile as of 2022) for the distance between your two homes.
Storage costs only count if they’re within a 30-day period of your move-out date. Only deduct temporary storage costs for your goods before you get moved into your new home ― not ongoing storage for stuff that won’t fit in your new house.
Step 2: Fill Out Form 3903
Once you’ve got your costs figured out, get a copy of Form 3903. Make sure you check the box at the top that certifies you qualify to deduct moving expenses.
Then, take your travel costs from step 1 and use them to fill out lines 1 and 2 of your form. Add those numbers together to get the amount for line 3.
Now, grab that W-2 we mentioned earlier. Find box 12, which should show the amount the government paid for your moving expenses. Put this number on line 4 of your 3903.
If that number in box 12 is higher than your total deductible moving expenses, you can’t deduct your move. But you still need to subtract your moving expenses from that number and include the result on your Form 1040.
If the number in box 12 is lower than your total moving expenses, congrats! You get to deduct some of your moving costs. Subtract the number in line 4 from the number in line 3 to get the amount of your moving expense deduction. Don’t forget to put that number on your 1040, too.
(If this seems complicated, don’t worry ― the form will also tell you how to do all this.)
Step 3: Attach Form 3903 to Your 1040
Take your completed Form 3903, attach it to Form 1040, and submit them to the IRS.
Keep a copy of both forms for your records. Likewise, keep any applicable receipts for your travel expenses. That way, in the unlikely event you get audited, you can prove that your deduction was legitimate.
Moving Deduction Example
What Is the Relocation Tax Deduction?
The term "relocation tax deduction" refers to the tax deduction you get for your moving expenses when you relocate.
Currently only members of the Armed Forces get to take a relocation tax deduction.
What If My Employer Paid for My Move?
Unless you're an active duty member of the Armed Forces, you won't be able to deduct moving costs. This applies even if your employer paid for your move. In fact, if your employer paid for your move, those costs will probably be considered taxable income. (Ask a tax pro if you're not sure.)
FAQ About Moving Expenses
No, most people can’t deduct moving expenses. You can only deduct moving expenses if you’re an active duty member of the Armed Forces moving on orders. Learn which moving expenses are tax deductible.
You need to use Form 3903 to deduct moving expenses. The IRS also has Instructions for Form 3903 that can help you fill out your form. Before you fill out your form 3903, make sure you understand which moving expenses are tax deductible.
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