For tax years before 2018, many people were eligible for tax deductions for the expenses incurred during a move. People who relocated simply filled out IRS Form 3903 to claim eligible deductions from moving expenses.
However, the tax reform changed things. For 2018, moving expenses may only be deducted by members of the military who meet specific qualifications. As you file your taxes this year, here’s what you need to know about your moving expenses.
Assess Whether Military Members Are Eligible
Members of the United States Armed Forces are the only ones who may still qualify for moving expense reimbursements for the 2018 tax year and beyond. To be eligible, they must have been on active duty at the time of the move. The reason for the move has to be a military order that brings them to a permanent change of station.
Also, the moving expenses that members of the U.S. Armed Forces may deduct will only qualify as a deduction if the employee wasn’t otherwise reimbursed. For example, if they are reimbursed for their expenses as part of their employment, they cannot then deduct those expenses that ultimately weren’t a burden to them.
Look at Eligibility Prior to 2018
If you are filing your taxes for years prior to 2018, you can deduct your moving expenses based on how these deductions were handled before the new tax law. That means that you can deduct those moving expenses if your move was related to the start of your work and you also meet the distance and time tests.
Talk to Your Employer About the Transition Rule
Under the new tax laws, a transition rule can help you or your employer. Under the transition rule, some payments and reimbursements won’t be considered taxable income. For example, if your employer paid a mover directly for services related to a move that was completed before 2018, that amount is not subject to federal income taxes or federal employment taxes.
If you were confused and have already paid on things you didn’t have to consider taxable income, you may opt to contact the IRS and ask to change past tax forms. Revisions can often be made, and it may very much be worth it if your moving expenses were significant.
Get Information on Reimbursement From Your Employer
Although you may not be eligible for tax deductions related to your move, you may still be reimbursed for moving expenses by your employer. If you are relocating for work, whether to accept a new job or move for a promotion, your employer may reimburse you for all or part of your moving expenses.
Find out whether you’ll be reimbursed prior to planning your move. If your employer does offer reimbursement, learn which moving expenses are covered and save the receipts for those purchases. Some businesses will cover all expenses down to the packing tape that you need to get your boxes ready for the move.
Develop a System for Saving Your Moving Receipts
If you qualify to include moving expenses on your 2018 tax return, you’ll need any receipts related to your moving expenses. Hopefully you saved either paper or electronic copies of these documents to verify the amount you’re deducting. If you’re moving in 2019 and believe your moving expenses are tax-deductible, you should also save all your receipts.
In the midst of a move, a folder full of receipts can easily get lost. Whenever possible, get emailed receipts from the movers or stores where you buy moving supplies. If only a paper receipt is available, take a photo of each receipt with your cell phone and save them together in a folder. When tax time rolls around, you’ll be glad to have everything organized.
Contact Modern Movers for help with all aspects of your move. From transporting your belongings to west Florida to storing stuff that you don’t immediately need in your new home, we can help you adjust to your new surroundings without stress or worry.