Drake Tax – 1040: Moving Expenses

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Article #: 19044

Overview

Moving expenses are reported on screen 3903 (Form 3903 – Moving Expenses) when a taxpayer relocates for work, has moving costs or employer reimbursements, or a state return still allows a moving expense deduction.

What happens next depends on whether the move qualifies for a federal deduction:

  • Qualifying military move. Drake uses the entries on screen 3903 to complete federal Form 3903 and carry the deduction to the federal return.
  • Everyone else. Federal Form 3903 is generally not produced. Complete screen 3903 only when moving expense data is needed on a state return (and use the state-specific fields on the screen when required).

Federal rules (2018 and later)

Beginning in 2018, a taxpayer can deduct moving expenses on the federal return only if they are a member of the armed forces on active duty and the move is due to a permanent change of station (PCS).

Note On screen 3903, select the checkbox that the taxpayer (or spouse, if applicable) is on active duty and the move is due to a military order for a permanent change of station when that situation applies.

If the taxpayer is not a member of the armed forces, do not expect a federal moving expense deduction. Complete screen 3903 in Drake Tax only if it is needed on the state return.

See IRS Instructions for Form 3903 for federal eligibility, dollar limits, and which expenses qualify.

Screen 3903 in Drake Tax

Enter 3903 in the screen selector to open Form 3903 – Moving Expenses. The screen displays a read before proceeding reminder with the same federal and state rules summarized above.

Use the top of the screen to identify who moved (TSJ), whether the entry is federal (F), and—when completing the screen for a state—the ST and City codes. State information links (for example HI and PA) open state-specific guidance where Drake provides it.

Expense amounts

Enter qualifying amounts on the lines that match Form 3903:

  • Line 1 – Transportation, storage of household goods, and personal effects
  • Line 2 – Travel and lodging expenses incurred during the move
  • Line 4 – Amount of moving expenses reimbursed by the employer (use the worksheet link on the screen when needed)

Storage fees (when Form 3903 is not required)

Use the Storage fees (if Form 3903 is not required) field only when the taxpayer meets all of the exceptions described on the screen, including that the move was in an earlier year, the taxpayer is claiming only storage fees during absence from the U.S., and any government-paid storage amounts are included in box 1 of Form W-2.

State use only

Some states require distance or mileage tests that no longer apply on the federal return. When a state still allows moving expenses, complete the State use only section on screen 3903 (mileage from old residence to new workplace, old residence to old workplace, and the Mileage test does not apply to this move checkbox when appropriate).

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