Active-duty service members may deduct certain unreimbursed moving expenses when the move is required by military orders. While moving expense deductions were eliminated for most taxpayers, members of the armed forces may still deduct eligible expenses, but extensive rules apply.
PCS Only
First, the move must be on military permanent change of station (PCS) orders. This does include the move to the first duty station and the final move when separating from the service. No deduction exists for a voluntary move or a move not directly related to orders.
‘Reasonable’
Second, the expense must be eligible and “reasonable.” (That’s the IRS’s word, not mine.) Many common moving expenses are not deductible, even for a service member. Eligible expenses include certain unreimbursed storage for up to 30 days while you are in transit, transporting pets, packing materials, car expenses and airfare.
Read More: When Do Military Service Members, Spouses Need to File Taxes in 2 States?
Unreimbursed
Third, the expense must be unreimbursed. This means the service member must not have received an allowance for the expense; and that the service or cost was not paid directly by the service. Therefore, a personally procured move (PPM) that costs less than the PPM allowance received is not deductible. However, if the cost of the PPM exceeds the allowance, the excess costs may be deductible. (As a side note, any PPM payments that exceed actual costs may count as taxable income, whether you receive a W-2 or not.)
Exclusions
On the flip side, the list of things that you may not claim is pretty long. This includes any expenses related to buying or selling a house, any expenses due to entering or breaking a lease, security deposits and storage charges that are not part of the 30-day limit. You also can’t deduct meals during travel. Also not permitted are deductions for expenses related to vehicle registration and driver’s licenses.
How to Receive a Deduction
When a service member qualifies to deduct moving expenses, the computation is made on IRS Form 3903, Moving Expenses. On this form, the member lists total qualified moving expenses, subtracts any nontaxable allowances and reimbursements, and carries the net deductible amount to Schedule 1, Line 14, of their Form 1040 as an adjustment to income. The service member should keep detailed records and receipts for all claimed expenses, as well as copies of orders and documentation of reimbursements.
Between temporary lodging allowances, mileage in lieu of transportation, personally procured move payments, pet allowances and per diem, most military families will not have any unreimbursed moving expenses. But if you do, it’s great to know that you can deduct those expenses on your tax return. Any small benefit helps!
Read More: State Tax Information for Military Members and Retirees
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