Tax filing window for 2023 is now open. Last Date: April 16 ⏰

Home › Business Deductions › Moving Expenses Tax Deduction

How to Deduct Moving Expenses From Your Taxes

business-deductions

How to Deduct Moving Expenses From Your Taxes

Sometimes, life requires a change. This can come in many forms, like a new house, job or a new city. Deciding to relocate for work is an exciting adventure, but it also comes with a long to-do list, and it can be costly. One pressing question many people have is "Are moving expenses tax deductible in 2023?" Until recently, relocating for work was more affordable thanks to the Internal Revenue Service's (IRS) moving tax deduction. In 2018, the IRS changed and updated a whole list of tax policies. One change did away with the moving expenses tax deduction, but certain states still permit the deduction on state tax returns. You may still qualify for the moving expense deduction 2022 and be able to take advantage of other tax deductions like groceries, vehicle mileage and health insurance.

Key takeaways

  • Moving expenses were always deductible in the past
  • Some states still allow you to claim moving expenses on state tax returns
  • When it comes to taking business deductions, you can choose either the standard deduction or itemized deductions

Table of contents

Are moving expenses tax deductible?...Read more

IRS moving expenses 2022 for the Armed Forces...Read more

Moving before the 2018 tax reform...Read more

What are moving expenses?...Read more

What moving expenses are tax deductible in certain states?...Read more

Tips to save on moving expenses...Read more

What expenses are tax deductible?...Read more

Are moving expenses tax deductible?

Sadly, they are not. In 2018, the Tax Cuts and Jobs Act changed the rules, and most people don’t qualify for the moving expense deduction anymore. A company can still choose to offer a moving allowance to reimburse their employee for moving costs using the company’s income. The company can deduct the cost from its taxes once it pays the employee for the moving expenses. Reimbursements from an employer, like moving expenses, are considered fringe benefits. Fringe benefits refer to any taxable income, including tips, commissions, bonuses, wages and other perks. Since these perks are taxable, they’re included in federal income tax withholding, federal unemployment taxes and FICA (Social Security & Medicare) taxes.

IRS moving expenses 2022 for the Armed Forces

If you’re an active Armed Forces member, you still qualify for the moving deduction since you’re required to relocate due to a permanent change of assignment. Your moving expenses can be claimed on Form 3903, regardless of employment requirements or the distance of the move. For example, your moving deductions are deductible if you are relocating from the military due to retirement or the end of your service.

Moving before the 2018 tax reform

Any move completed before the 2018 tax form needed to meet the distance and qualifying time test to qualify for deducting moving costs. To pass the distance test, your new job needs to be at least 50 miles more than the distance between your old home and your job. For example, if you worked for an accounting firm, and it was 20 miles from your home, your new job needs to be at least 70 miles from your old home. Your move has to have occurred around the time you started your new job, and you have to work at your new job for at least 39 weeks following the move. If you were self-employed before 2018, you could also have filed Form 3903. The requirements were more intense because you not only needed to work at your new job for 39 weeks in the first year following the move, you also had to work 78 weeks in the second year.

What are moving expenses?

For moving expenses to be deductible before 2018, they needed to be both reasonable and necessary for your move. Those expenses included:
  • Boxes, tape and markers
  • Airfare
  • Freight or shipping costs
  • Movers
  • Moving van rental
When it came to moving expenses, only some things were considered deductible and other items were not deductible.
Image listing expenses related to moving and renting a house including penalties, broker fees, mortgage penalties, and house hunting expenses. No mention of self-employment, 1099, freelancer, or taxes.

What moving expenses are tax deductible in certain states?

Some states follow the IRS’ updates and adapt their tax laws accordingly. Others do their own thing and set their own rules. With the change to the moving expenses tax deduction, only seven states allow moving deductions or exclude moving expenses from taxable income:
  • Pennsylvania
  • New York
  • Massachusetts
  • New Jersey
  • Arkansas
  • California
  • Hawaii
The rules vary from state to state. For example, Virginia allowed the deduction until recently. You can use a tax deduction calculator to find eligible write-offs in your state. California and New York still allow a moving expense deduction and exclude employer reimbursement as taxable income.

Tips to save on moving expenses

Moving is expensive, and the costs can accumulate quickly. With the right tips and advance planning, you can save a lot of money on your move.
Tips to save on moving expenses - declutter before packing, speak to utility companies, consider a moving container, research moving companies, pack boxes yourself, move during off-season, use own packing materials. No mention of self-employment, 1099, freelancer, or taxes.

What expenses are tax deductible?

With rising costs and high inflation, you might be looking for ways to save on taxes now more than ever. Deductions can help reduce your self-employment tax bill by lowering your taxable income. This is especially useful if you have to make estimated tax payments every quarter. When it comes to deductions, you can take the standard deduction or itemize your deductions. It’s up to you to decide which will save you the most money. The standard deduction is the most common option and is a specific dollar amount set by the IRS.
Image displays standard deduction rates for 2022 and 2023 for different filing statuses like single, married, filing jointly, separately, and head of household. No mention of self-employed, 1099, freelancer, or taxes.
When choosing the standard deduction option, there are a few things to keep in mind. You can’t deduct charitable contributions, health insurance premiums or home mortgage interest. Deducting these expenses is only possible when you choose to itemize deductions. If you choose to itemize deductions, you’ll need to keep track of your expenses using receipts or bank statements. You’ll calculate your deductions on Schedule A and record the total on Form 1040. If you use FlyFin, A.I. will do all the work and find all your deductions. CPAs offer unlimited 1099 tax support on the app including preparing and filing tax returns.
Image listing common itemized deductions for freelancers including vehicle expenses, business meals, travel, education, health insurance premiums, and charitable contributions. Relevant for self-employed, 1099, and tax purposes.

Depreciation Tax Deduction

The depreciation tax deduction can be claimed for any asset that is used for business. There are three methods to calculate this deduction.

Education Expenses Tax Deductible

Education expenses are tax-deductible for self-employed individuals as long as they are related to their current job. Report the deductions on Schedule C.

Internet Bill Tax Deduction

For many who work from home, the internet is necessary for doing business. For some people, their internet bill counts as a tax write-off.

Write Off Your Car Payments

There are many tax deductions you can take related to your car, if you use it for work, but unfortunately your car loan payment isn't one of them.

Home Office Deduction

How the home office deduction saves self-employed individuals and freelancers on their taxes.

Home Improvement Deduction

What qualifies as a home improvement tax deduction and how homeowners who are self-employed or freelancers can benefit most.

Travel Expense Deduction

If you travel for work as a freelancer, there are a number of travel expenses you can claim as tax deductions in 2023 – find the details here.

Food and Entertainment Deduction

For 2023, you can deduct 50% of the cost of business meals as tax deductible – but not every meal can be deducted. This is relevant to self-employed people.

Car depreciation tax

Here's how to take advantage of depreciation, one of the biggest tax deductions people who use their car for work can take.

Car tax write off

Many freelancers drive their own vehicle for business and may qualify for certain car and mileage tax deductions.

Simplified home office deduction

If you use space in your home as an office for your business, you can take either the actual home office deduction or the simplified home office deduction.

Rent Tax Deduction

If you're self-employed, there are few ways you can write off your rent, and if you know how to use them, they can be among the most important ways to save money on taxes each year.

Side Hustle Taxes

Self-employed individuals can write off business expenses when filing side hustle taxes. You can avoid paying taxes on side jobs if your net income is under $400 in a year.

Mileage Tax Deduction

Get a car mileage tax deduction using either the standard mileage deduction or actual expenses deduction. You will report this on Schedule C.

Cell Phone Tax Deduction

A cell phone tax deduction is available to self-employed individuals if it is used for their business. They can also write off their internet usage.

Business And Consultant Tax Deduction

Consultant tax write-offs are useful in lowering self-employment taxes. Sole proprietors can use a QBID to lower taxable income, as they are a pass-through business entity.

Is Credit Card Interest Tax Deductible?

Credit card interest is tax-deductible if it is from a business-related purchase. You can write off a portion of the interest even on a personal credit card if it comes from a business expense.

Are Office Expenses Deductible?

The home office tax deduction is used to write off your home office and office-related expenses. Claim it using the standard or simplified method.

Advertising And Marketing Expenses Deduction

Marketing tax deductions related to promoting a business can be claimed by self-employed individuals. Report them on Schedule C.

Business Startup Costs and Deductions

Business startup costs can be amortized over 15 years. You can also deduct up to $5,000 in the first year if total costs are below $50,000.

Vehicle Write Off For Business

Vehicles used for business can be a tax write-off in 2023. You can claim this deduction even if you lease your vehicle under the actual expenses method.

Are Subscriptions Tax Deductible?

Subscriptions are tax deductible for self-employed individuals. You can write off the business use percentage as a tax deduction on Schedule C.

Depreciation Tax Deduction

The depreciation tax deduction can be claimed for any asset that is used for business. There are three methods to calculate this deduction.

Education Expenses Tax Deductible

Education expenses are tax-deductible for self-employed individuals as long as they are related to their current job. Report the deductions on Schedule C.

Internet Bill Tax Deduction

For many who work from home, the internet is necessary for doing business. For some people, their internet bill counts as a tax write-off.

Write Off Your Car Payments

There are many tax deductions you can take related to your car, if you use it for work, but unfortunately your car loan payment isn't one of them.

What’s FlyFin?

Filing taxes might seem like a challenging task. But with a cutting-edge digital tool like FlyFin, you can file your taxes effortlessly. There's no need to save receipts since the app keeps track of all your expenses in one place. Its powerful A.I. finds every deduction possible, saving you time and money. Then our expert team of CPAs prepares a 100% accurate federal and state tax return for you. When you file with FlyFin, you're protected with full audit insurance and get access to the CPA team 24/7 for any questions.
https://dem95u0op6keg.cloudfront.net/image/PriceCalculator.webp

Expert tax CPAs ensure 100%-accurate tax filing

https://dem95u0op6keg.cloudfront.net/image/AiBrain.webp

A.I. finds every tax deduction, eliminating 95% of your work

https://dem95u0op6keg.cloudfront.net/image/MoneySack.webp

On average users save $3,700

rightCTAImage
Was this tip useful?
happy-active
Yes
happy-active
No