Rules to deduct moving expenses for military taxpayers

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If you are a military taxpayer, you may be required to move from one place to another due to ‘permanent change of station’.  While moving, if some of the moving expenses are un-reimbursed, then you can deduct them from your income by filing Form 3903.

What is permanent change of station?

a. Moving from your home to first post of active duty

b. Moving from one permanent post of duty to another

c. Moving from your last post to your home in the United States.  This must occur within a period of one year from the date of termination of your active duty.

If you are the spouse or dependent of a member of Armed Forces, who is imprisoned or dead, a permanent change of station means moving to your or the member’s home on record or a nearer point in the US.

If you are required to move to a different location than the location of the member, due to the decision of the military, then the move is also treated as a move towards your job location.

If the government provides storage services or reimburses you towards moving, then you need not include the value of such services in your income.  If you receive any temporary lodging allowance, then such amounts are also not to be included in your income.

However if the total amount of allowances or reimbursements received from the government exceed your actual expenses of moving, such an excess is treated as your income and it appears on your Form W2.  If any allowance or reimbursement is more than the actual cost of moving, and it is not included on your W2, it must be included on line 7 in form 1040 in your gross income.

You can use Form 3903 for deducting the expenses which exceed your allowances and reimbursements from the government.  You should NOT deduct moving expenses which were provided by the government.

What consists of deductible moving expenses?

Generally moving expenses include expenses towards moving household goods and personal effects, related travel and un-reimbursed expenses.  These expenses include hiring a trailer, packing, insurance etc.  They also include the expenses of storing and insuring the personal effects and household goods incurred within 30 days from the date such goods are moved from yourold home to your new home.

The expenses of travel from your old home to a new home including lodging expenses but excluding meals also qualify for deduction.  That includes mainly actual air travel expenses.  You can also use the standard mileage rate which is 20¢ a mile if you move by car.  The expenses of all the members of your household who are staying with you in the old home as well as in the new home can be claimed as a deduction.  Do not include expenses of moving the tenants!

If you are moving to a foreign country or from one foreign country to another, such expenses are eligible for deduction provided they are reasonable.

You need to report such deduction towards moving expenses by carrying the amount to line 26 in Form 1040.

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