Folk who are self-employed or work for an employer can deduct relocating expenses if those expenses are directly related to generating taxable income in Massachusetts. It is not possible to deduct moving expense reimbursements while filing your taxes.
Expenses paid directly out of one's pocket, however, are deductible. The TCJA eliminates the ability to deduct moving expenditures for almost all taxpayers, except some service members of the armed forces. This modification is not implemented in Massachusetts.
What Are Moving Expenses?
Relocation costs are a reduction in take-home pay rather than an itemized deduction. Relocating costs are deducted from your adjusted gross income, which can help you qualify for tax breaks that are capped at a higher income level. The costs of moving can be difficult to understand for first-time movers.
Rental trucks, packing materials, insurance, mileage or gas, and short-term storage are all examples of reasonable moving expenses. A night's hotel stays in the middle of a protracted move can be factored in as an additional expense. However, you can't factor in any money spent on food.
Travel costs can be estimated using the IRS's normal mileage rate of 17 cents per mile. Alternatively, you can deduct those charges if you keep track of your transportation expenditures. The moving costs, such as fuel, tolls, oil, and parking, are fully deductible.
Are Moving Expenses Tax Deductible?
However, moving expenses may be tax deductible on your federal income taxes if you are on active duty in the military. If you are not on active duty, however, moving expenses are not tax deductible. The moving expense deduction will not be available beginning with the 2018 tax year.
It will remain unavailable until the 2025 tax year unless you are a member of the armed forces on active duty or your spouse or dependent. On the other hand, only a few states, like New York and California, continue to permit taxpayers to deduct moving expenses from their state tax returns.
Also, if you are a taxpayer not in the military, moving expenditures reimbursed by your employer are now considered part of your gross income. The exception to this rule is if the government reimbursed you for moving expenses associated with a permanent move. Before the passage of the TCJA, one could deduct reimbursements from their gross income.
Can You Deduct Moving Expenses in 2022?
In 2022, most taxpayers will no longer be able to deduct their relocation costs. You can't use the tax savings from moving on to your next federal return. For tax purposes, this adjustment is made for 2018 through 2025. If you relocated before 2018 but forgot to deduct your moving costs, you can probably file an amended return to do so.
Unfortunately, many people can no longer deduct their relocation costs because of President Trump's Tax Cuts and Jobs Act (TCJA) of 2017. The Jobs Act (TCJA) and Tax Cuts make it clear: if you moved after 2018 and are not a military or Armed Forces member, you cannot deduct your moving expenditures.
Costs associated with relocating that cannot be repaid by an employer or other third party, such as a government agency, are not eligible for the tax credit that had been available before the TCJA. This act is now on hold, but its provisions could be reinstated soon if Congress thinks they are needed. Understand that you cannot write off any tax-related costs initially covered by the government, either directly or through reimbursement. To deduct the costs from your taxes, you must first pass two more criteria: the time test and the distance test.
Active-Duty Military Members May Be Able To Deduct Moving Expenses.
You must meet the following requirements before deducting moving costs from your taxes. You may be eligible for certain perks if you currently serve in the military and have been forced to relocate to a new permanent base. The Internal Revenue Service defines a "permanent change of station" as a move from one permanent duty station to another or from one permanent duty station to a home or a closed area in the United States.
A "permanent change of station" also includes returning from your last duty station to your home or a location inside the United States that is more convenient for you. In the event of the service member's imprisonment, death, or desertion from duty, the surviving spouse and dependent children may claim a deduction for relocation costs.
Transportation costs for home items and personal property, as well as the costs of gasoline, tolls, and parking if using a personal vehicle, are all tax deductible if the move is inside the United States. During the relocation process, you will be supplied with lodging at no expense, but you will be responsible for providing your food.
Other Taxpayers' Rules for moving expenses
Even if you aren't in the military but moved in 2017, you may be eligible for a tax break. If you need to change your tax return, you must do so within three years of the original filing date or within two years of the date the taxes related to the return were paid.
In the years leading up to 2018, moving expenses like packing, shipping, or storing your furniture and other household items and travel and hotel fees were tax deductible. Meals and detours cannot be deducted as part of the relocation cost, just as they cannot be under military regulations. You can only deduct relocation costs if you pass these three requirements.
Conclusion:
Before 2018, taxpayers could deduct relocation expenses incurred when relocating to start a new job or seek employment. This provision was eliminated by the Tax Cuts and Jobs Act (TCJA). Certain armed forces members can still claim it as an itemized deduction on Schedule 1. To determine your tax bracket, you must first determine your "adjusted gross income," or AGI.
