Many military families are in the final planning stage of their permanent change of station (PCS) move. As “PCS season” approaches, tax questions about what moving expenses are deductible and how to deduct them are often asked. Unlike other tax deductions, you do not need to itemize on your taxes to benefit from this savings. The full amount of your moving expense is subtracted directly from your total income, reducing your adjusted gross income (AGI).
As a rule, taxpayers must meet both the IRS time and distance test – generally speaking…be an employee at least 39 weeks in the 12 month period following new employment and move over 50 miles away from your old home and job – to qualify for this deduction. However, active duty members of the military with PCS orders are exempt from this testing requirement.
The major expenses related to your move should be covered by the government and therefore, cannot be claimed as a deduction on your taxes. This includes lodging, meals, and gas. I highly recommend contacting both your outgoing and incoming Transportation Management Office (TMO) for information on what items can be included in your household goods (HHG) shipment. You may be surprised to find out what the government will ship and your various pick-up options.
Here are several common eligible expenses you may incur during relocation that should be included as a write-off on Form 3903, line 1. As with any tax deduction, keep a record of your expenses in the event the IRS request proof.
- Vehicle Shipment (usually occurs when moving across country or overseas)
- Pet Shipment
- Cost of connecting or disconnecting utilities
- Tips and cost of meals given to movers
- Temporary storage (for 30 days after you leave your old home, often used when selling a home prior to TMO pick-up)
If you forgot to claim these deductions on a prior year return and would like to submit an amendment or have questions, please contact me.