Moving for work can be an exciting opportunity for career advancement and personal growth. However, the financial burden of relocation can be significant. While the standard moving expense deduction isn’t available to most taxpayers (as of 2024), there are exceptions for specific groups, particularly members of the Armed Forces.
Does everyone get a tax deduction for work-related moves?
Prior to 2018, taxpayers could deduct certain expenses incurred when relocating for work, provided they met specific distance and time requirements. Unfortunately, the Tax Cuts and Jobs Act of 2017 eliminated this deduction for most taxpayers for tax years 2018 through 2025. This means expenses associated with packing, hiring movers, travel costs, and temporary housing generally cannot be deducted on your federal tax return.
Relocation that does come with tax benefits
Those in the military can receive special tax considerations when relocating due to a Permanent Change of Station (PCS). A PCS is a military order assigning an active-duty member to a new duty station within the United States or overseas. Recognizing the unique challenges of military moves, the government offers a comprehensive reimbursement program to ease the financial strain on service members and their families.
Deductible expenses for military PCS moves
- Household Goods Shipment: The government typically covers the cost of transporting your household goods within weight limits set by your rank and family size. This ensures your belongings arrive safely at your new duty station.
- Temporary Storage: Storage fees for household goods within a specific timeframe (around 30 days) before or after your move are generally covered. This allows for flexibility in coordinating move-in dates and housing arrangements.
- Travel Expenses: The government reimburses travel costs (including mileage or per diem) for authorized travel to your new duty station. This includes travel for yourself, your dependents, and a private vehicle. This financial support helps offset the costs of transportation for your entire family.
- House Hunting Trip: One house hunting trip to your new location may be authorized and reimbursed. Finding suitable housing in a new area can be a challenge, and this benefit allows for a dedicated trip to explore potential residences.
So what isn’t deductible?
While the government offers significant support for PCS moves, there are some expenses that service members are responsible for:
- Meals: The government reimburses travel costs, but not meal expenses during your move. Factoring in meals for yourself and your family during the relocation journey is an essential part of your budgeting process.
- Selling or Buying a Home: Closing costs, realtor fees, and other expenses associated with selling your old home or buying a new one are not covered by the government. The financial implications of buying or selling a home during a PCS move require careful planning and potentially separate financial strategies.
- Temporary Lodging: While the government provides per diem rates for travel days, you’ll likely be responsible for temporary lodging costs like hotels or short-term rentals upon arrival at your new location. Temporary housing can be a significant expense, so exploring cost-effective options and potentially coordinating arrival dates with housing availability are important steps.
- Storage Beyond Authorized Limits: Storage fees exceeding the government-approved timeframe are your responsibility. If you require additional storage beyond the allotted time, you’ll need to factor in those costs.
Maximizing your military move benefits
To make the most of your military moving benefits, consider these tips:
- Plan Ahead: Start gathering receipts and documenting your expenses early. This simplifies the reimbursement process and ensures you don’t miss out on any benefits.
- Understand Your Entitlements: Familiarize yourself with the Joint Travel Regulations (JTR) and consult with your base’s transportation office for specific details regarding your authorized reimbursements. The JTR is the official document outlining travel allowances and reimbursements for military personnel.
- Utilize Resources: Military OneSource is a valuable program offering a wealth of resources on PCS moves, including a free tax preparation service called MilTax. This program can help you understand your specific benefits and navigate the reimbursement process.
Beyond the Move: Additional Military Tax Deductions
Military service comes with unique tax advantages beyond just moving expenses. Let’s explore some additional deductions available to service members:
- Combat Pay: Earned income from qualified hazardous duty areas is generally exempt from federal income tax. This provides significant tax relief for those serving in dangerous locations.
- Moving Expenses for Reservists: While not as comprehensive as active-duty benefits, reservists performing inactive duty training for more than 100 miles from their home and staying overnight may be eligible to deduct travel expenses (including meals) and lodging costs.
- Disabled Military Retirees: Military retirees receiving disability benefits may be able to exclude a portion of their retirement income from federal taxes if they meet certain criteria. This can significantly reduce their tax burden.
- Interest on Military Pay: Interest earned on savings accounts holding deposits from military pay may be exempt from state and local taxes, depending on your location.
- Education Benefits: The GI Bill and other military education benefits are generally not considered taxable income. This allows service members to invest in their future education without facing additional tax liabilities.
Seeking professional tax guidance
Military tax laws can be complex, and regulations may change. Consulting with a tax professional experienced in military finances is highly recommended. They can provide personalized guidance based on your unique circumstances and ensure you’re maximizing all available deductions and tax benefits.
While the standard moving expense deduction isn’t available for most taxpayers, military personnel receive exceptional support during PCS moves. Understanding your entitlements and utilizing available resources can ease the financial burden of relocation.
Additionally, the various tax benefits offered to service members demonstrate the government’s commitment to supporting those who dedicate themselves to serving our nation. By combining a proactive approach to expense documentation and seeking professional guidance, military members can navigate the complexities of moving for work and ensure they are taking full advantage of the well-deserved tax benefits associated with their service.
Photo by Benjamin Faust