Understanding Moving Expense Deductions in 2022: A Comprehensive Guide

What moving expenses are tax deductible in 2022? In most cases, moving expenses are not tax deductible at the federal level for the vast majority of taxpayers. The Tax Cuts and Jobs Act of 2017 suspended the moving expense deduction for most taxpayers from 2018 through 2025. However, there’s a significant exception: Active duty members of the Armed Forces who are moving pursuant to a permanent change of station may still be able to deduct certain moving expenses. Let’s delve into the specifics.

Who Can Still Deduct Moving Expenses?

Active Duty Military Personnel

As mentioned, the only taxpayers generally eligible to deduct moving expenses in 2022 are active duty members of the U.S. Armed Forces. This deduction is available if the move is due to a permanent change of station (PCS). A PCS includes a move:

• From your home to your first post of active duty.
• From one permanent post of duty to another.
• From your last post of active duty to your home or to a place within the United States.

What Expenses Can Military Personnel Deduct?

For those in the military who qualify, the deductible expenses are fairly specific. They primarily include the reasonable expenses of moving household goods and personal effects from your old home to your new home. This can involve:

• Packing, crating, and transporting belongings: This covers the cost of boxes, packing materials, and the actual transportation, whether you hire a moving company or rent a truck.
• Storage fees: You can deduct the cost of storing your belongings for up to 30 consecutive days after they’ve been moved from your old home and before they’re delivered to your new home.
• Insurance: The cost of insuring your belongings during the move is also deductible.

What Expenses Are Not Deductible?

It’s crucial to know what cannot be deducted. Even for military personnel, certain expenses are off-limits. These typically include:

• Meals during the move: You cannot deduct the cost of food you consume during the move.
• Lodging during the move: Similarly, hotel or motel expenses are not deductible.
• New furniture: The cost of purchasing new furniture for your new home is not deductible.
• Real estate expenses: Costs associated with buying or selling a home, such as realtor fees or closing costs, are not deductible as moving expenses.
• House-hunting trips: Expenses incurred while searching for a new home are not deductible.
• Temporary living expenses: Costs associated with living in temporary housing while waiting to move into your permanent residence are not deductible.

How To Claim the Deduction: Form 3903

If you’re an eligible member of the Armed Forces, you’ll use Form 3903, Moving Expenses, to claim the deduction. This form helps you calculate your deductible moving expenses. You’ll need to keep meticulous records of all your expenses, including receipts and documentation proving the move was due to a PCS.

Reimbursements and Their Impact

It’s also important to understand how reimbursements affect your deduction. If you receive a non-taxable reimbursement for moving expenses from the military, you cannot deduct the expenses covered by that reimbursement. In other words, you can only deduct the expenses you paid out-of-pocket. If the reimbursement is included in your taxable income, you can deduct the expenses, as you are essentially paying for them with after-tax dollars.

State-Level Deductions: A Glimmer of Hope

While the federal moving expense deduction is largely suspended, some states still offer their own moving expense deductions. The rules and requirements vary significantly from state to state, so it’s essential to check with your state’s tax agency or a qualified tax professional to determine if you’re eligible for a state-level deduction.

FAQs: Decoding the Moving Expense Deduction

1. I’m a civilian who moved for a new job in 2022. Can I deduct my moving expenses?

Generally, no. The Tax Cuts and Jobs Act of 2017 eliminated the moving expense deduction for most civilian taxpayers from 2018 through 2025. You cannot deduct your moving expenses on your federal tax return.

2. I’m in the military and received a permanent change of station order in 2022. What documentation do I need to claim the moving expense deduction?

You’ll need your PCS orders as proof of the move, as well as detailed receipts for all deductible expenses. Keep records of everything, including moving company invoices, storage bills, and any other relevant documentation.

3. Can I deduct the cost of shipping my car to my new duty station?

Yes, if you are an active member of the armed forces and it is part of your move under PCS orders, the cost of shipping your car can be included as part of the cost of moving your household goods.

4. I’m a veteran. Can I deduct moving expenses if I moved after leaving the military?

Potentially. You may be able to deduct moving expenses if the move is within one year of termination of active duty or release from reserve component.

5. I was reimbursed by the military for some of my moving expenses. How does that affect my deduction?

If you received a non-taxable reimbursement, you cannot deduct the expenses covered by that reimbursement. Only expenses you paid out-of-pocket can be deducted. If the reimbursement is included in your taxable income, you can deduct those reimbursed expenses.

6. My new job required me to move, but I’m not in the military. Are there any exceptions that would allow me to deduct my expenses?

Unfortunately, no. The law is quite clear. The moving expense deduction is generally not available for civilian employees from 2018 through 2025.

7. Can I deduct the cost of cleaning my old apartment before moving out?

No. Cleaning fees are generally not deductible as moving expenses, even for eligible military personnel.

8. What if I moved to a foreign country due to my military service? Are the rules different?

The rules are generally the same. You can deduct the reasonable expenses of moving your household goods and personal effects to a new location outside the U.S. due to a PCS. However, the cost of transporting your family may be limited to the cost of transporting them to the nearest point in the U.S.

9. Are there any income limitations on the moving expense deduction for military personnel?

No. Unlike some other tax deductions and credits, there are no income limitations that would prevent eligible military personnel from claiming the moving expense deduction.

10. If I store my belongings for longer than 30 days, can I still deduct the storage fees?

No. Storage fees are only deductible for up to 30 consecutive days between the time your belongings are moved from your old home and the time they are delivered to your new home.

11. What happens if my permanent change of station order is later revoked?

If your PCS order is revoked, you may need to amend your tax return to remove the moving expense deduction. Consult with a tax professional for guidance.

12. Where can I find Form 3903 and instructions for claiming the moving expense deduction?

You can download Form 3903 and its instructions from the IRS website (irs.gov). The instructions provide detailed information on eligibility requirements, deductible expenses, and how to calculate your deduction.

Navigating the complexities of tax deductions can be challenging. While the moving expense deduction is limited for most taxpayers, eligible members of the Armed Forces should take advantage of this valuable benefit. Always consult with a qualified tax professional to ensure you are claiming all eligible deductions and complying with all applicable tax laws.