Mark Kohler explains how the 2017 tax law eliminated the moving expense deduction for most taxpayers starting in 2018, with an exception only for active-duty military. He reviews what was deductible before: distance and time tests, and specific moving costs. Employer-paid moving benefits are also affected by the change.
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Hi, Mark Kohler here with another tax and legal tip. Let's talk moving expense. What happened to the moving expense? Well, you need to know the rules if you're preparing a 2017 or older tax return and what you have to plan for in 2018 until 2023. That's right, whole new ballgame. Now, if you've gone through the miserable experience of moving in 2017, as I did, there's some ways to maximize this cost that you incurred on your tax return and get a deduction which could save you some taxes. So let me tell you what the 2017 rules are and then it'll make more clear sense of what the 2018 rules are moving forward. Now, for 2017 and earlier, here's the rules you need to know. Number one is the distance test. That's right, distance. You have to have moved at least 50 miles, new location for a new job. That's right, 50 miles. Anything less than that, no write off at all. And it has to be for new employment. Number two is the time test. The time test means that at this new location, you have to have worked in the new job for at least 39 weeks of the last 12 months. So what this means, a couple little variations maybe, is that when you move there, you don't have to have a job right away, but you better get one and work at least 39 weeks in that new job within 12 months of the move. And keep in mind, if you move in the fall and then you file your tax return and you're into the new tax year. But I want to take this write off for last year. That's okay. If you were to get audited, you want to just be able to show that within the 12 months of the move, even if it spanned two tax years, you worked at least 39 weeks at this new employment. Number three, your expenses need to be reasonable. So just keep track of travel, hotel, mileage, food, any expenses to get you moved, and then for your items moved, you can write off your U haul, rental truck or rider truck or whatever, and even a professional mover. But you want to add up all those expenses and for 2017 or earlier, you take all those, they're going to go on the front page of your tax return. A great tax write off, not limited by AGI or your income level, married, filing, single, separate, whatever, it's all good. It's a great write off on the front page of your tax return. Now, in 2018, the game changed. This is no longer a write off. That said, it's that simple. No more moving expense. Write off. The only people that can take the moving expense are active duty servicemen or women in the military that have to move because they're in active duty at the military and the 50 mile requirement doesn't apply. So they might move bases that are closer than 50 miles to one another. Don't worry about it. So servicemen and women, we appreciate your service to our country and you get to take the moving expense on the front page of your tax return. But for the rest of us, no more. Now you might be frustrated by this, but this is what the government does when they give us new tax legislation. They give us some good things and they take away some other things to pay for those other good things and the government giveth and the government taketh away. So this is one of the items that got axed. So so sorry. Now one ancillary item as well. For those big companies that are paying the moving expenses for their employees to move and was a big fringe benefit for some of you that maybe had a corporate job. Those are also curtailed and so some of these big employers may not be paying the moving expense or throwing down the gauntlet with nice perks when it comes to a move. Now you may be at a company that allows for that and gives you those write offs and but just know that they're facing the same problem. So maybe don't expect as much or just assume as much. Bottom line 2017 and earlier. Track the expense. Take it, grab it, use it. Moving forward. Be careful. Now in 2023 all these new laws are gone and Congress is back at work trying to figure out what we get to keep and what we are going to have to live with. So anyway, love it. Moving expense is out there for prior years and let's all hope it comes back and we can use it in years to come. Thanks so much for watching and if you found that helpful, please look in the description below. I've got links to my tax and legal library, my QuickBooks training videos, how to start a small business 50, 60, 70 videos, some as long as 30 minutes, explaining more information on tax and legal strategies that will change your life. Also, if you'd like to subscribe to my newsletter or check out my social media links, please click here. There are weekly free tips and strategies and articles that you'll find extremely helpful and I would appreciate it if you'd subscribe to my channel. I've got so many videos here. I produce every week on my YouTube channel and I'd love to give you a ping every time I shoot a new video. Thanks so much. And keep living the American dream.
