You may deduct some of the expenses on your 2017 return if you moved for work-related reasons in 2017— even if you do not itemize deductions. (Or, if your employer reimbursed you for moving expenses, that reimbursement may be excludable from your income.) However, in 2018, moving costs likely won’t be deductible, and any employer reimbursements will probably be included in your taxable income.
Suspension for 2018–2025
The Tax Cuts and Jobs Act (TCJA) that became law this past December suspends the moving expense deduction for the same period as when lower individual income tax rates usually apply: 2018 through 2025. For this period, it also delays the exclusion from income of qualified employer reimbursements of moving expenses.
The TCJA does offer an exception to both suspensions for active-duty members in the Armed Forces (along with their spouses and dependents) who move because of a military order that calls for a permanent change of station.
Tests for 2017
If you moved in 2017 and wanted to claim a deduction on your 2017 return, the first requirement is that the move is work-related. You do not have to be an employee; the self-employed can also be eligible for the moving expense deduction.
The second is a distance test. The new primary job location needs to be at least 50 miles farther from your former home than your former primary job location was from that home. So, even if not moving would have increased your commute significantly, a work-related move from town to neighboring town or from city to suburb probably won’t qualify.
Finally, there’s a time test. During the first year, you must work full time at the new job location for at least 39 weeks. For the self-employed, you must meet that test and also work full time for at least 78 weeks during the first year at the new job location. (Certain limited exceptions apply.)
The moving expense is subtracted from your gross income to determine your adjusted gross income because it is an “above-the-line” deduction. You also don’t have to itemize to benefit because it’s not an itemized deduction.
Usually, you can deduct:
- Transportation and room expenses for yourself and household members while moving,
- The price of packing and moving your household goods and other personal property,
- The expense of insuring and storing these items while in transit, and
- Charges related to connecting or disconnecting utilities.
However, don’t expect to deduct everything. Meal costs during move-related travel aren’t deductible nor is any part of the purchase price of a new home or expenses incurred selling your old one. Also, you may have to include the reimbursement as income on your tax return if later your employer reimburses you for any of the moving costs you’ve deducted.
Contact us if you have questions about whether you can deduct moving expenses on your 2017 return or about what other tax breaks won’t be available for 2018 under the TCJA.
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Ben R Shull CPA LLC provides clients with tax, transaction, and advisory services. The insights and quality services we deliver help lead our clients through the next generation of changes, and accelerate growth while reducing risk. CPA Katy, TX.