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Moving Expense Deduction

There are rules for the tax deduction of moving expenses. Learn if you can claim it.
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Overview

Employees or self-employed individuals may deduct the expense of moving themselves and their families provided the move relates to employment or business income that is subject to Massachusetts tax.

Moving Expense Reimbursements may not be claimed as a deduction. Out of pocket expenses, however, may be deducted.

Please note for tax years beginning before 2018, if you moved due to a change in your job or business location or because you started a new job or business, you can deduct reasonable unreimbursed moving expenses if you meet all f the following criteria:

  • Your move was closely related to the start of work
  • You meet a distance test
  • You meet a time test

Under the TCJA, a deduction for moving expenses is no longer allowed except for certain members of the Armed Forces. Massachusetts does not adopt this change. A deduction for moving expenses continues to be allowed if the above requirements are met as Massachusetts follows IRC § 217 in effect as of January 1, 2005. See TIR 18-14 for more information.

Claiming your moving expense deduction

To claim the deduction, the following must be met:

  • The taxpayer's new main job location (commute) is at least 50 miles farther from his/her former home than his/her old main job location (commute) was from the former home
  • The taxpayer must be employed full time for at least 39 weeks during the 12-month period immediately following the move. If self-employed, the taxpayer must be employed or performing services full time for at least 78 weeks during the 24-month period immediately following the move and at least 39 weeks during the first 12-months.
  • The amount spent on moving is reasonable

Qualified deductible moving expenses are limited to the cost of:

  • Transportation of household goods and personal effects
  • Travel (including lodging but not meals) to the new residence

Where an automobile is used in making the move, a taxpayer may deduct either:

  • The actual out-of-pocket expenses incurred (gas and oil, but not repairs or depreciation, etc.); or
  • A standard mileage allowance as determined by the IRS

Distance test examples

Example 1

Distance from former residence to former main job = 3 miles

Distance from former residence to new main job = 58 miles

The taxpayer qualifies for the deduction since the new main job is 55 miles (58-3) farther from the former residence than the old main job location was.
 

Example 2

Distance from former residence to former main job = 11 miles

Distance from former residence to new main job = 52 miles

In this case, the taxpayer doesn't qualify for the deduction since the new main job is only 41 miles (52 - 11) farther from the former residence than the old main job location was.

Example 3

Nonresident living and working in northern New Hampshire takes a job in Massachusetts and moves to southern New Hampshire to be closer to the job in Massachusetts.

Nonresidents are entitled to the moving expense deduction provided the move relates to employment or business income that is subject to tax in Massachusetts.

Distance from former residence to former main job = 22 miles

Distance from former residence to new main job = 152 miles

The taxpayer qualifies for the deduction since the new main job is 130 miles (152-22) farther from the former residence than the old main job location was.

Members of the Armed Forces

Members of the armed forces can have a Massachusetts moving expense if they:

  • Have Massachusetts income and
  • Have moved to or from Massachusetts.

Since moving and storage expenses furnished in kind by the military, or cash reimbursements or allowances to the extent of expenses actually paid or incurred incident to a permanent change of station for a member of the U.S. Armed Forces on active duty, are excludable from both Federal and Massachusetts gross income, such expenses can't be used in the calculation of the moving expense.

No tax status and limited income credit calculation

This deduction impacts the calculation of No Tax Status and the Limited Income Credit as it is treated as an adjustment to arrive at Massachusetts adjusted gross income on the Massachusetts AGI Worksheet and Schedule NTS-L-NR/PY.

Reporting moving expenses on your original tax return

The amount reported on U.S. Form 1040, Schedule 1 must be entered on either Mass Form 1 or Form 1-NR/PY, Schedule Y, Line 5

Nonresidents and part-year residents can only take those moving expenses that relate to employment or business income which is subject to Massachusetts tax.

Submitting an abatement or amended tax return

If you’re submitting an amended tax return or abatement, you’ll need to submit a:

  • Copy of U.S. Form 3903* - Moving Expenses (if applicable)
    *Prior to 2018

 

Additional resources

Massachusetts References

Federal References

  • 26 U.S.C. § 217 - U.S. Code - Unannotated Title 26. Internal Revenue Code § 217. Moving expenses

Questions

Email —  Contact US - Personal Income Tax

Phone — (617) 887-6367 (Personal Income)

 

 

Page updated: March 26, 2020

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