Understanding Your Moving Expense Deduction for 2025 Taxes

Relocating for work, starting a new job, or moving abroad can be exciting — but the costs can add up fast. In the current U.S. tax law, most civilian taxpayers cannot claim a moving expense deduction. Under the TCJA of 2017, after December 31, 2017, the deduction would not apply for most taxpayers between Jan. 1, 2018, and Dec. 31, 2025, and it would be available only to active military who are required to relocate because of their military assignment.

Understanding the rules can help taxpayers better understand potential deductions

Who Can Claim the Moving Expenses Deduction?

Under current U.S. tax law, the moving expenses deduction is mainly available for active-duty military personnel. For most other taxpayers, the deduction was suspended by the Tax Cuts and Jobs Act (TCJA) of 2017 through tax year 2025.

However, for most civilian taxpayers, including expats the moving expense deduction remains suspended during this period:

• Moving for military service
• Reimbursed employer relocation expenses treated as non-taxable
• Certain foreign assignments under employer benefits

Even when deductions aren’t allowed, keeping track of expenses is smart. Some employer reimbursements are taxable, and proper documentation ensures accurate reporting.

Qualifying Criteria for Moving Expenses Deduction

To claim moving expenses, you generally must meet two tests:

1. Distance Test – Your new home must be at least 50 miles farther from your old home than your previous workplace.

• Example: Your old home was 5 miles from your old job. Your new home must be 55+ miles from your previous job.

2. Time Test – Under traditional IRS rules, workers generally need to meet minimum work requirements:

• Employees: At least 39 weeks during the first year after the move.
• Self-employed individuals: At least 78 weeks during the first two years.
• Documentation like lease agreements, utility bills, or payroll records is typically required to prove eligibility.

What Expenses Qualify Under the Deduction?

Qualifying expenses can include:

• Transportation of household goods – Shipping, packing, and insurance
• Travel expenses – Airfare, mileage, lodging while moving
• Storage costs – Short-term storage during relocation
• Utility setup fees – Relocation-related setup costs

Non-deductible expenses: Meals, temporary living costs, or home sale expenses (except in rare circumstances).

Special Considerations for Expats

If you’re moving abroad:

• Employer-paid relocation benefits may be excluded from income if properly structured.
• Foreign tax credits may apply if you pay taxes in both the U.S. and the host country.
• Keeping receipts and invoices in USD may help simplify reporting.

Example:
Jessica, a U.S. citizen, moved from New York to London for a new job. Her employer reimbursed shipping, flights, and temporary housing. She may need to report taxable reimbursements but can also claim certain deductions if she qualifies under military or specific employer provisions.

Understanding Moving-Related Tax Documentation

1. Keep detailed records of all moving-related expenses.
2. Separate reimbursed vs. unreimbursed expenses.
3. Convert foreign expenses to USD for proper IRS reporting.
4. Tax professionals may provide guidance, especially if moving abroad or dealing with complex employer reimbursements.

Filing the Deduction

• Form 3903 is used for claiming moving expenses for qualifying active-duty military members.
• Attach to your Form 1040.
• It may be helpful to keep receipts for at least three years, in case of IRS questions.

Common Mistakes to Avoid

• Claiming meals or temporary housing as deductible
• Ignoring the distance or time tests
• Forgetting to include employer reimbursements in income when required
• Failing to convert foreign currencies accurately

Bottom Line

Moving is expensive, and U.S. tax rules on moving expenses can be complicated. Active-duty military members moving under official orders may still qualify for the deduction. Even when deductions are limited, tracking expenses carefully, understanding employer reimbursements, and consulting a tax professional may help ensure accurate reporting.

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