Moving Expenses

11 replies
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Hello,

My wife and I are retired. Our main business activity involves 5 rentals (2 in Texas and 3 in California). We sold our home and the 2 rentals in Texas and moved to California in 2021. So this is not an employment related move, but it is a business related move to better manage our rentals in California.

Elsewhere, in previously answered questions by TT Community, I read that moving expenses have been suspended until 2025 (except for military folks). Is this still true? Is there any option for me to deduct any of my moving expenses?

Thank you!

DMarkM1Answer

Alumni - Intuit

Thank you for that clarification.

One question: Did everything you say in the summary apply to both Federal taxes and State of California taxes? In other words, does state of California have the same requirements as the federal government for being eligible to claim moving expenses?

Thank you!

The rules for CA are the same. You must be employed or self-employed. If self-employed there would be a Schedule C. Rental income is not self-employment income it is considered passive income even as an active participant. If you are a real estate professional you would be filing a schedule C for example and that income would be subject self-employment taxes. Rental income is not.

Here are the instructions for FTB Form 3913. See page 1 paragraph B.

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xmasbaby0

Level 15

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-reform

Per the tax laws that changed for 2018 and beyond, moving expenses are not deductible on a federal return except for certain active duty members of the military.

There are several states that allow a deduction for moving expenses on the state return: AZ, AR, CA, HI, IA, MA, MN, NJ, NY, PA and VA You can enter your moving expenses in the federal software and the information will flow to your state return.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

fkhalilzAuthor

Level 5

Thank you for your response.

I understand that Moving expenses in our case would be deductible only in our new state, i.e. California. But before I enter the data into TT, is managing our rentals in California a legitimate moving expense from California state tax point of view? What do I need to justify this claim?

Thank you!

JohnW152

Alumni - Intuit

No, it’s not a legitimate reason for claiming the moving expense on your California return. The move must be related to your workplace when you’re either an employee or self-employed.

According to Who Can Deduct Moving Expenses -- Non-military Members in the 2021 Instructions for Form FTB 3913, Moving Expense Deduction:

If you move to a new home because of a new principal workplace, you may be able to deduct your moving expenses whether you are self-employed or an employee.

[Bolding mine.]

See also What About Moving Expense Deductions? in New To California for more information.