Use Form 3903 to figure your moving expense deduction for a move related to the start of work at a new principal place of work (workplace). If the new workplace is outside the United States or its possessions, you must be a U.S. citizen or resident alien to deduct your expenses.
For tax years prior to 2018, Federal tax laws allow you to deduct your moving expenses if your relocation relates to starting a new job or a transfer to a new location for your present employer. To qualify for the deduction, your new work location must be a sufficient distance from your old home and you must begin working shortly after you arrive. Beginning in 2018, the moving expense deduction is only available to certain military personnel.
What are moving expenses?
When tallying the expenses you plan to claim as your moving expense tax deduction, all of them must count as both reasonable and necessary to your move.
Reasonable moving expenses may include the cost of the following:
⦁ Gas or the mileage on your vehicle
⦁ Rental trucks
⦁ Short-term storage
For a long-distance move, you might include the cost of lodging at a hotel on the way to your new home, but you can’t deduct expenses for meals.
The IRS allots a standard mileage rate (17 cents per mile for 2020) 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:
⦁ Parking fees
Are moving expenses tax deductible?
If you moved prior to 2018 but didn’t claim the moving expense tax deduction, you may be able to file an amended claim to deduct your moving expenses. Likewise, if you serve as an active-duty military member, you can claim moving deductions against your taxable income and include them on Form 3903 as an attachment to your Form 1040.
To claim these expenses as a deduction on your tax return as an active member of the Armed Forces, your move must result from a military order and permanent change of station. You can deduct your unreimbursed moving expenses for you, your spouse, and your dependents.
You can’t deduct expenses that are reimbursed or paid for directly by the government. You must satisfy two additional criteria to qualify for counting these expenses as tax deductions: meeting the time and distance tests.
Do military filers use Form 3903?
Military personnel should use Form 3903 to report their moving expenses:
Shipping and storage costs for packing and moving your household goods and personal effects 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
Reimbursements for amounts on lines 1 and 2 that are not included in box 1 of your W-2 should also go on line 4
If you’re looking at your W-2 to verify these amounts, the amount you report on line 4 should appear in box 12, code P. These directions are also included on Form 3903.
If your reimbursement exceeds your total 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. But 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.
But if you need to amend a previous return prior to tax reform, or if you serve in the active military and meet certain circumstances, you may qualify for a deduction. If neither of these describe your situation, you may still want to track your expenses because some states continue to provide a deduction on your state tax return if you meet specific requirements.