Are Moving Expenses Tax Deductible?

Which Moving Expenses Are Tax Deductible? | How Do I Deduct Moving Expenses? | What Is the Relocation Tax Deduction? | What If My Employer Paid for My Move? | FAQ

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 moving expenses on your tax return:

• Are you an active-duty military member 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?

Bottom line: If you don’t meet the IRS guidelines, you 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.

Which Moving Expenses Are Tax Deductible?

Even if you meet the conditions to take a moving expense deduction, you can’t deduct just any cost related to your move. The IRS has specific guidelines on which expenses count and which don’t.

Deductible Moving Expenses

If you’re eligible for moving expense deductions (see above), you can deduct costs that involve the basic packing and transportation of your household belongings, and travel expenses.[1]

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 (your wage and tax statement) from the government that you’ll want to keep handy.

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.

Note: 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

Sarah moved from the US Air Force Academy in Colorado to Kirtland Airforce Base in New Mexico (about 400 miles). She can deduct the cost of her travel, including gas and hotels. In this case, let’s say she decides to take the standard mileage rate of $0.22 per mile instead of keeping exact records. That makes her travel costs $88 for car travel and $300 for a couple nights in a hotel.

Then, assume her total costs for moving her belongings (including packing, hauling, and storage) were $1,500. On Form 3903, she’d list her total moving expenses as $1,888.

If that number is higher than the amount the government reimbursed her for, Sarah gets to deduct the difference. If it’s lower, she won’t get to deduct anything for her moving costs.

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.

Relocation tax deduction used to apply more broadly to a variety of tax situations, but 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 and be added into your total gross income. (Ask a tax pro if you’re not sure.)

Do international moves count?

Military members can deduct expenses for international moves in some circumstances. There is no distance test to qualify for deductible moving expenses on your federal tax return. Instead, the same criteria applies (you have to be an active duty military member).

Qualifying “foreign” moves include a move out of the United States, or between two foreign countries.[1]

Other ways to save when you move

It’s great to be able to write off qualified moving expenses and get a deduction on your income tax, but most non-military members don’t qualify. However, that doesn’t mean you can’t find other ways to reduce the overall cost of your move.

• Try different booking times — Most movers charge higher rates during their busiest times (weekends, summer months, etc.) so get quotes for multiple dates and book the cheapest one.
• Do some of the labor yourself — If you have time, packing all of your items can help you save hundreds of dollars on labor costs when you move.
• Compare quotes — Don’t book the first mover you get a quote from. Shop around and even ask movers if they’ll price match (some of them do).
• Rent a truck — A DIY move is a lot more work than using a full-service mover, but that’s why it’s cheaper. If you’re comfortable driving, and loading/unloading without professionals, DIY moving is almost always the cheapest way to go.

FAQ About Moving Expenses

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