Moving Expenses

Moving expenses are any costs you incur while moving to a new home. They can include packing supplies, the cost of a moving company or a self-storage container (PODS), and transportation costs for your personal items. The new United States tax laws changed that in 2018. Beginning January 1, 2018, all payments to vendors (such as movers or storage companies) or reimbursements by employers of an employee’s moving expenses are considered Form W-2 taxable wages. In addition, the IRS has suspended a tax exclusion for all moving expense reimbursements made by employers through 2025. The IRS outlines the tax treatment of moving expenses in Publication 521, “Funding Your Business and Employee Relocation.” This publication discusses the new tax rules and provides examples of how to handle moving expenses.

A wide range of moving expenses may be tax deductible if you meet certain criteria, including a time and distance test. For example, you must have moved within 12 months of starting your new job and worked full-time at your new location for 39 weeks or more in the first year after the move. For decades, moving expenses (including the shipment of household goods and personal effects, airfare for the employee and their family, and in-transit lodging) were not included in the Form W-2 taxable income of the employer and were tax-free to the employee.

Moving Expenses Deduction

Moving expenses can include a variety of costs, including hiring movers or packing supplies, as well as the cost of relocating your belongings. You should always budget for these moving expenses and try to stick to them so that you do not overspend. If you are relocating for work, your employer may reimburse you for moving expenses as a benefit. These reimbursements are considered fringe benefits and are taxed at the same rate as any other taxable income, such as tips, commissions, bonuses, or wages.

A moving allowance is a good way to save on your taxes, but only those moving expenses that qualify for a deduction can be excluded from your income. If you receive this type of reimbursement, look at your W-2 form to see if the company has included it as part of your income. Another qualifying factor is that your new job must have requirements that are at least as strict as those of your old job. This could mean that you have to be at your new job for at least a certain number of hours each week or must be available to work weekends.

If you are an active-duty military member, you can also deduct your moving expenses, regardless of the distance or employment requirements. This is particularly helpful if you are moving from a permanent base to an overseas station, where the living can be more expensive. The IRS recognizes a wide range of moving costs as eligible for tax deductions. It’s important to note that some moving expenses aren’t deductible for most people. For example, if you’re moving to a different state, you’ll need to register your car and pay fees for licensing. You’ll also have to buy a security deposit and get your first month’s rent in advance.

You can deduct expenses for renting a storage unit for 30 days. Your employer may offer moving allowances to cover these costs for you. Your employer will also reimburse you for the costs of traveling to find a new home, such as airfare and mileage. They may also provide hotel stays and a per diem for meals. If you’re an employee at a company that provides moving expenses, the costs are not taxable for you. However, they are taxable for your employer.