Moving expenses can be significant for military service members and their families, particularly when moving between duty stations or to a new duty station. Fortunately, in some cases, military moving expenses may be tax deductible. This article will explore the rules surrounding military moving expenses and tax deductions.
Overview of Military Moving Expenses
Military service members and their families may be eligible for reimbursement of their moving expenses through the government’s Permanent Change of Station (PCS) program. The program is designed to help military families move to a new duty station and covers expenses such as travel, lodging, and transportation of household goods. However, the program does not cover expenses related to the sale or purchase of a home or the temporary storage of household goods.
What Moving Expenses Are Tax Deductible?
Military service members must meet specific criteria to be eligible for a tax deduction. The most important criteria are:
- The move must be related to a change in the service member’s job location.
- The move must be at least 50 miles from the service member’s former home than their old job location.
- The service member must work full-time for at least 39 weeks in the 12 months following the move.
If the above criteria are met, the following moving expenses may be tax deductible:
- Transportation of household goods: This includes the cost of packing, shipping, and storing household goods.
- Travel expenses: This includes the cost of transportation, lodging, and meals during the move.
- Other expenses: This includes expenses such as the cost of disconnecting and reconnecting utilities, shipping pets, and shipping vehicles.
It’s important to note that expenses related to the sale or purchase of a home, such as closing costs, real estate commissions, and mortgage fees, are not tax deductible.
How to Claim the Tax Deduction
To claim the tax deduction, military service members must file Form 3903 (Moving Expenses) with their federal income tax return. The form includes a worksheet that helps service members calculate their eligible moving expenses and the tax deduction they are entitled to. The deduction is taken on Schedule 1 (Form 1040) used to report additional income and adjustments to income.
It’s essential to keep accurate records of all moving expenses, including receipts and invoices, to support the tax deduction claim. Service members should also keep a record of the dates and locations of the move and their new job location.
Special Rules for Military Service Members
Some special rules apply to military service members when it comes to claiming a tax deduction for moving expenses:
- Overseas moves: If a service member is moving to an overseas duty station, they may be eligible for a tax deduction for certain expenses, even if they don’t meet the distance and time requirements.
- Combat zone moves: If a service member is moving to or from a combat zone, they may be eligible for additional tax benefits, including an extension of the period in which they must meet the full-time work requirement.
- Reassignment: If a service member is reassigned to a new duty station while on active duty, they may be eligible for a tax deduction for moving expenses, even if they don’t meet the distance and time requirements.
Who is Entitled
Members of the Armed Forces of the United States may be entitled to a tax deduction for certain moving expenses related to a permanent change of station (PCS) if the move is closely related to the start of work at a new duty station.
The deduction is generally available to active-duty Armed Forces members, including commissioned officers, warrant officers, and enlisted personnel, as well as certain commissioned officers of the National Oceanic and Atmospheric Administration (NOAA) and the Public Health Service (PHS).
Additionally, certain Department of Defense (DoD) civilian employees who are transferred to a new duty station may also be eligible for the tax deduction.
It’s important to note that this deduction has particular requirements and limitations, so it’s advisable to consult with a tax professional or the Internal Revenue Service (IRS) for specific information and guidance.
Generally, individuals who are not members of the Armed Forces or civilian employees of the DoD are not eligible for the military moving expenses tax deduction. However, there may be certain exceptions or particular circumstances, so it’s always best to consult with a tax professional or the IRS to determine eligibility.
How Much Can You Save
The amount you can save using the military moving expenses tax deduction varies depending on the specific expenses you incurred and the tax laws in effect for the year of your move.
Under current tax laws, eligible taxpayers can deduct the reasonable unreimbursed expenses of moving household goods and personal effects and the travel expenses (including lodging but not meals) incurred while traveling to the new duty station. However, the deduction is subject to certain limitations and requirements, such as the distance test, time test, and the requirement that the expenses must be closely related to starting work at the new duty station.
In general, the amount you can deduct for qualified moving expenses is the actual cost of moving your household goods and personal effects, plus the travel expenses. You cannot deduct expenses for meals, temporary lodging, or other personal expenses related to the move.
It’s important to note that tax laws and regulations change frequently, so it’s always best to consult with a tax professional or the IRS for specific information and guidance regarding your particular situation.
In summary, military moving expenses may be tax deductible in certain circumstances. Service members and their families should keep accurate records of all moving expenses and consult with a tax professional to determine their eligibility for a tax deduction. By taking advantage of the tax deduction, service members can offset some moving costs and make the transition to a new duty station easier.