UAN Passbook Guide
What is IFSC Code?
January 4, 2019
UAN Passbook Guide
SALT Deduction under U.S. Tax Law
January 4, 2019

Moving Expense Deduction in Federal Tax Reform

Last Update Date : April 30, 2019
Estimated Read Time: 6 min

Moving expenses can be claimed as a reasonable cost of moving not only yourself but also your property. These costs include a moving van, a storage unit and temporary insurance used in your travel. According to the new norms of IRS, the taxes you will file in 2019 of the previous year (Tax Year: 2018) the moving expenses will no longer be tax deductible which it previously used to be except for certain Armed forces members.

Standard Mileage Rates

As per the revised moving expenses, standard mileage rates for the use of a car, van, pickup or panel truck will be:

  1. There will be 54.5 cents for every mile of business travel driven, which is a cent increase from 2017.
  2. There will be 18 cents per mile driven for medical purposes which is a cent increase from 2017. The rate for medical purposes is based on variable costs.
  3. There will be 14 cents per mile driven in service of charitable organizations which remain unchanged as the statute sets it.

Vehicle Expenses

The vehicle expenses can be deducted as moving expenses of the members of the Armed forces:

  1. Who are on active duty and
  2. Are in under a military order in relation to a permanent change of station.

A permanent change of station includes the following:

  1. If you move from your home to your first post of active duty.
  2. If you move from one permanent post of duty to another, and
  3. If you move from your last post of duty to your home or to a nearer point in the U.S. The move must occur within the period allowed under the Joint Travel Regulations or within 1 year of ending your active duty.

Use a separate form 3903 for each move, in case you qualify to deduct expenses for more than one move.

Spouse and Dependents

If a member of the Armed forces dies, deserts, or is imprisoned, a permanent change of station for the spouse or dependent includes a move to the following:

  1. The place of enlistment.
  2. The home of record of the member, spouse or dependent.
  3. United States nearer point.

Your moves are treated as a single move to your new main job location, if the military moves you, your spouse, and dependents, to or from separate locations.

Deductible Moving Expenses

If you are moving due to a permanent change of station, you are liable to deduct the reasonable unreimbursed expenses of your move along with the members of your household.

Member of Household

Anyone qualifies as a member of your household if he meets the following criteria:

  1. If he/she has both your former home and your new home as his or her main home.
  2. If it doesn’t include a tenant or employee unless you can claim that person as a dependent on your tax return.

You can deduct expenses if it is not reimbursed or furnished in kind for the following:

  1. In case if you move household goods and personal effects including- expenses for hauling a trailer, packing, crating, in-transit storage, and insurance.

Exceptions

You are not allowed to deduct:

  1. In case of expenses for moving furniture or other goods, you bought on shifting from your old home to your new home.
  2. For storing and insuring household goods and personal effects
    (You can include only the cost of storing and insuring your household goods and personal effects within any period of 30 consecutive days after the day these goods and effects are shifted from your former home and before they are delivered to your new home)
  3. In case of travelling which includes your lodging on moving from your old home to your new home including your car expenses and airfares.

You can deduct as car expenses either of the following:

  1. Your actual out of pocket expenses including the amount you pay for gas and oil for your car.
  2. The standard mileage rate is 18 cents a mile.

Note:

You can add you’re parking fees and tolls to the amount claimed under any of the methods.

Exceptions

  1. You are not allowed to deduct any part of general repairs, general maintenance, insurance, or depreciation of your car.
  2. You are not allowed to deduct the cost of any unnecessary side trips or lavish and extravagant lodging.
  3. Your meals cannot be included.

Non-Deductible Expenses

The members of the Armed forces cannot claim deductions for the following items:

  1. Any part of the purchase price of your new home.
  2. Car tags.
  3. The license of the driver.
  4. Expenses incurred in buying or selling a home which includes closing costs, mortgage fees, and points.
  5. Expenses of not only entering into but also breaking a lease.
  6. The home improvements in order to help sell your home.
  7. In case you incurred a loss on the sale of your home.
  8. In case of losses from disposing of membership in clubs.
  9. In case of penalties from a mortgage.
  10. In case of Real estate taxes.
  11. In case of your carpet and draperies refitting.
  12. In case of return trips to your former residence.
  13. In case of your security deposits.
  14. In case of any storage charges excluding expenses incurred in transit and foreign moves.

How the members of the Armed Forces can complete Form 3903

The members of the Armed forces can complete the Form 3903 by taking the following steps:

1. You have to complete lines 1 through 3 of the form, with the use of your actual expenses.

Exceptions

  • You should not include any expenses for moving services provided by the government.
  • You should not include any expenses that were reimbursed by an allowance you don’t have to include in your income.

2. You have to enter on line 4 the total reimbursements and allowances you received from the government for the expenses claimed on lines 1 and 2.

Exceptions

  • You should not include the value of moving or storage services provided by the government.
  • You should not include any part of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance.
    The above amount should be identified on Form W-2, box 12, with code P.

3. You should complete line 5. If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and Form 1040, line 26. This is your moving expense deduction.

Exceptions

  • If line 3 is equal to or less than line 4, you will miss your moving expense deduction.

Foreign Move

A foreign move is a move or its possessions to a foreign country or from one foreign country to another foreign country from the United States.

Exceptions

In case of a move from a foreign country to the United States or its possessions is not considered a foreign move.

The deductible moving expenses under foreign move are as follows:

  1. The expenses of moving your household goods and personal effects to and from storage comes under foreign move.
  2. In case of storing these items for part or all of the time, the new job location will remain your new job location which should be outside the United States.

People Also Ask

Q. Can the member of the Armed forces deduct the expenses for the employees such as a maid, nanny or nurse?

A. No, he is not liable to deduct such expenses.

Q. What can be included in Line 1 of form 3903.

A. You can include the following for-

  1. For moves within or to the United States or its possessions.
    • The amount that you have paid for packing, crating, and moving your household.
    • The amount you have paid to store and ensure household goods and personal effects.
  2. For moves outside the United States or its possessions.
    • The amount you have paid for packing, crating, moving, storing, and ensuring your household goods and personal effects.

Q. Under what circumstances filing of form 3903 is not required?

A. Filing form 3903 is not required:

  1. In case you moved in an earlier year.
  2. Claiming of storage fees if you are not present in U.S.
  3. In case the amount paid by the government for the storage fees is already included in box 1 of your Form W-2.

We hope that this guide helps you in understanding the Moving Expenses as per the new changes in the U.S. Tax Laws and helps the armed forces people in claiming benefits.

How H&R Block can help you?

H&R Block is the global leader in the Income Tax filing services domain. Get your U.S. Expat tax filing done by our tax experts who will help you understand your tax modalities, prepare your return and file it online.

How’s your tax refund doing this year? Not sure?

Get a Tax Pro from H&R Block to get you the best refund starting at $75 only
Leave a Rating!
5.0 (13 Votes)
Anshu Jain
Anshu Jain is the Manager, Offshore Operations at H&R Block (India). She holds an MBA in Finance and has an experience of over ten years in business operations, U.S. tax advisory and program management. When she is not working, Anshu enjoys reading and writing about U.S. taxation.

Still Have Questions?