By Ken Berry, J.D.
Despite changes from the Tax Cuts and Jobs Act (TCJA), you may claim a deduction for job-related moving expenses if you qualify as military personnel. But simply working for the armed forces doesn’t command a deduction. The taxpayer in a new case, Kent, Bench Order Dkt. No. 14884-23, 3/20/25, lost this battle in Tax Court.
First, here’s some background information. Prior to the TCJA, individuals could claim a deduction for moving expenses if they passed a two-part test based on distance and time. The main rules are as follows.
1. Distance: The new job location must be at least 50 miles farther from your old home than your old job location was from your former home. The IRS uses the shortest of the most traveled routes to measure the distance between the two points.
2. Time: Typically, you must work full-time for at least 39 weeks during the first 12 months after you arrive in the general area of the new job. But you don’t have to work for the same employer as long as the 39-week test is satisfied.
Assuming you pass both parts of the test for a job-related move, you could deduct the reasonable costs of moving your household goods and personal effects to your new location, as well as travel expenses (including lodging, but not meals) between the two locations. Normally, this includes charges by a moving company or a truck rental.
Alternatively, an employer could reimburse employees for their reasonable moving expenses. Such reimbursements are generally exempt from tax.
However, the TCJA suspended both the deduction and reimbursement exemption for 2018 through 2025, except for qualified expenses incurred by active-duty military personnel. This includes a permanent change of station such as a move from home to your first post of active duty, one permanent post of duty to another or your final post of duty to your home or to a closer point in the U.S. The move must occur within either one year of ending your active duty or the period allowed by government regulations.
New case: A civilian worked as a contractor for the U.S. Air Force. She received official orders directing her to move to a permanent new duty station during the COVID-19 pandemic. Accordingly, the contractor deducted moving expenses on her 2020 tax return.
The order to move came directly from the armed forces. Nevertheless, the contractor didn’t qualify as active-duty military personnel. In fact, she was a civilian.
Result: Deduction denied.
Be aware that this tax break is reserved for clients who qualify as “active-duty” military personnel. In other words, the taxpayer must serve full-time in the armed forces. This includes training and attendance at designated service schools. Active-duty military personnel must be employed full-time, receive regular compensation and benefits and can be deployed at any time.
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