The Internal Revenue Service provides taxpayers with Form 3903 to claim a deduction for job-related relocation costs. Moving expenditures are no longer deductible for tax years beginning after 2017 unless the relocation was required by military orders for a permanent change of station.

Who Is Eligible to Submit Form 3903

Before the tax year 2018, taxpayers who made more than one eligible relocation for employment purposes throughout the year had to file more than one Form 3903. The Internal Revenue Service authorized this form to deduct other reasonable moving expenditures, such as the cost of hiring professional movers or travel expenses linked to relocating.

Form 3903 could only be filed by those who matched specific criteria even for tax years previous to 2018. First, the distance between your new residence and your new employment has to be more than 50 miles. In other words, if your old workplace was located 14 miles from your old residence, your new workplace needed to be located 64 miles from your old residence.

However, if a member of the United States military is retiring or ending their duty, they are eligible to receive reimbursement for relocating expenses regardless of distance or job requirements.

Filling Out a Form 3903

To deduct moving expenses for tax years before 2018, you had to take the qualifying time and distance test. Form 3903 is restricted to current members of the United States armed forces alone. Those in the military services who claim the deductions need not meet any standards regarding either distance or time spent traveling.

The IRS website or the advice of a knowledgeable tax expert can be used to ascertain whether or not a taxpayer's relocation expenditures are deductible.

Are Moving Expenditures Tax Deductible?

If you relocated before 2018 but forgot to deduct your moving costs, you may be able to do so by filing an amended return. Like civilians, active-duty military personnel can deduct relocation expenses from their taxable income by filling out Form 3903 and attaching it to their Form 1040.

A permanent change of station or other military order is required for active duty personnel to relocate. Your out-of-pocket relocation costs, as well as those of your spouse and any children you support, are fully deductible. The government will not allow you to deduct any costs that are either repaid or paid for by them. You must pass the time and distance standards to deduct these costs from your taxable income.

Is There A Time Limit?

To qualify, you must begin your new employment within the first 12 months after your relocation and work full-time for at least 39 weeks. If you have to start your new employment months before your family moves to the new site because of extenuating circumstances like a sick spouse or a child who needs to graduate high school near your last house, you may be exempt from this rule. If your transfer happens after your first day of employment, you can still deduct its costs.

What Exactly Is The Distance Requirement?

The travel time from your old house to your new one is another must-have. To be eligible for reimbursement of relocation expenses, your new place of employment must be more than 50 miles from your previous residence.

To qualify for the deduction, you must move at least 70 miles away from your previous employer if, for instance, your previous residence was 20 miles from your previous workplace.

When a member of the United States armed forces makes a permanent change in their military status, such as retirement or termination of duty, they are entitled to reimbursement for all relocating expenses, regardless of distance or job restrictions.

Is Form 3903 Required For Those Serving In The Military?

To account for relocation costs, service members should fill out Form 3903:

• Expenses incurred for packing, transporting, and storing furniture, appliances, and personal effects fill out Form 3903, line 1
• Line 2 is for housing, transportation, and meals.
• Employer relocation assistance claims need to be recorded on line 4.
• Line 4 of your W-2 should be used for reimbursements for amounts from lines 1 and 2 that did not go into box 1.

Amount reported on line 4 should show up in box 12, code P, on your W-2 if you're double-checking these figures. Form 390 also includes these instructions for your convenience. For tax purposes, you may only deduct the amount you spend on relocating; any amount reimbursed over and above must be reported as income. However, if your relocation costs exceed your reimbursement, you can deduct the difference from your taxable income.