Tax Reform 101: What You Should Know About Changes to the Moving Expense Tax Deduction

Tax Reform Happy family with two children having fun at new home. Young multiethnic parents with two sons in their new house with cardboard boxes. Smiling little boys sitting on floor with mother and dad.

Are there moving boxes in your future? Summer is a popular time to move and many are moving miles away to take a new job. If that’s you, congratulations on embarking on your new adventure!

Here are a few things you should know about moving for a new job since the new tax reform law passed:

  • Beginning in tax year 2018 (the taxes you file in 2019) the cost of those boxes, the moving van, the people you pay to load and unload them and other previously tax deductible moving expenses paid out of pocket are no longer tax deductible under the new tax reform law that was passed at the end of last year.
  • Your employer, however, can still reimburse you for your moving expenses.
  • The new law applies to civilians, but not to military personnel who are relocating.
    • Active duty military can still deduct qualifying moving expenses if they don’t receive reimbursement from the government for the move.
    • Active military members also don’t have to pay tax on qualified moving expense reimbursements, as long as the move is to a permanent change of station due to a military order. Those moving expenses include travel and lodging to the new location for you and your family, moving household goods, and shipping cars and pets.

If you are not active duty military and your employer is paying for your move, your employer will include what it pays for your move as well as reimbursements you receive from them as income reported on your W-2. Of course, your employer won’t be withholding income taxes from that income, since there’s nothing to withhold from.

If your employer is footing the bill for your move, take into account that the amount paid by your employer and any reimbursement may increase your tax liability. You can review your withholding to see if enough is being withheld from your income when taking into consideration the additional amount being added to your income.

TurboTax W-4 Calculator can help you easily figure out your withholding allowances, whether you want to boost your tax refund or your take-home pay. Don’t worry about knowing the new tax reform law. TurboTax has you covered and will be up to date with the latest tax laws.

Comments (7) Leave your comment

  1. What if you are a federal employee and moved based on retirement from the federal government. They moved me to a place – retired and had to move.

  2. Hi Ginita, I’m hoping you can give an opinion regarding moving expenses.

    My wife and I own a home in California. She recently took a job in Indianapolis. She rented an apartment and signed a one year lease. We continue to maintain ownership and reside in the California home.

    After two months on the job she suffered a medical condition which will leave her unable to work. She had to terminate the lease at a cost of $1978.

    Her car was shipped to Indy at a cost of $1500. I drove it back to California, 2200 miles plus travel costs including meals, lodging and fuel. Since she was employed by an airline, we paid no flight costs.

    Is there any possibility of any moving expense deductions in the above scenario.

  3. This information appears to apply to those people moving for job related purposes. What about those who are relocating due to aging, downsizing, and other purposes? Is there any allowance for moving expenses for those purposes?

  4. What about moving expenses this year that are not reimbursed by the employer? What about hotel expenses while looking for a new place at the new job?
    Gary

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