Deductible PCS Taxes

Changing your permanent duty station come with a lot of financial expenses.  The good news is the majority of the expenses are tax deductible.  Under normal circumstances in the civilian world, a certain set of criteria must be met in order to deduct moving expenses from your annual taxes.  However, if you are an active duty military member moving due to a PCS order, you are automatically eligible for these expenses to be deducted and do not have to meet the list of criteria.  You must complete and submit Form 3909 in order to deduct the un-reimbursed portion of your moving expenses.  For an active duty servicemember the following circumstances constitute a permanent change of station:

    • Move from your home to your initial post of active duty
    • Move from one permanent post of duty to another
  • Move from your last post of duty to your home or to a nearer point in the United States.  This move must occur within one year of ending your active duty or within the period allowed under the joint Federal Travel Regulations

For a spouse and dependents a permanent change of station includes a move to:

  • The servicemember’s place of enlistment or induction
  • Your, or the servicemember’s home of record
  • A nearer point in the United States

Government Reimbursements and income

The following sources of income should not be included in your total income calculations when filing annual taxes:

  • Value of moving and storage service provided by the government due to PCS
  • Dislocation allowance
  • Temporary lodging expense
  • Temporary lodging allowance
  • Move-in housing allowance

Normally any excess funds you receive over the price of the cost of the PCS move, once receipts are reconciled, is include in your wages on your W-2 Form.  However, if for any reason these overages are not reflected on your W-2 Form, you are responsible for including them in your gross income on Form 1040.  A Form 3903 can be used to deduct any eligible expense that you were responsible for because costs exceeded your reimbursement received.  For example some eligible expenses for deductions would include temporary lodging, dislocation and move-in housing allowances, movement of household goods and personal effects and travel.

Expenses associated with moving household goods and personal effects include things such as expenses for renting and hauling a trailer or truck, packing services, crating services, in-transit storage and insurance.  The costs for storage and insurance can only be deducted for the cost of the period of 30 consecutive days after the goods and personal items are removed from the previous home.  Travel expenses can include costs associated with car expenses, such as oil, gas and a standard mileage rate of 20 cents per mile, airfare, tolls and parking fees and lodging.  Food may not be included in the deductions.  Please note that if the move is considered a foreign move defined as a move from the United States or its possessions to a foreign country of from one foreign country to another but not from a foreign country back to the United States or one of its possessions, deductible moving expenses will also include:

Moving your household goods and personal effects to and from storage

Storing these items for part of or all of the time the new job location remains your main job location. (the new job must be located outside of the United States)

All moving expense deductions can be reported on Form 3903 and transferred to Form 1040 tax forms.