Navigating Moving Expenses for Physicians in 2025

For professionals, evolving tax landscape trends provide opportunities to potentially claim deductibles and stay compliant with federal and state regulations.

The introduction of the 2017 Tax Cuts and Jobs Act meant that taxpayers would no longer be able to claim moving expense deductions until 2025. Still, there are some situations where you can still get moving expenses reimbursements depending on the factors surrounding your move.

Here’s what you should know about the moving expenses you qualify for and how to navigate taxation better as a busy physician.

What Are Some Common Moving Expenses?

Knowing some of the most common moving expenses you can incur is important to take advantage of potential expense deductions or credit in your taxable income.

They include:

• Professional moving services: These moving expenses include hiring a professional moving company to coordinate packing, loading, and unloading your belongings.
• Packing supplies: You’ll also incur moving expenses for purchasing bubble wrap, boxes, and other stationery needed to safely pack your items.
• Long-distance moving: If you’re traveling long distances, you may have to consider car license and registration fees for the state you’re driving in or through. These also include expenses for short accommodation and conventional transportation.
• Storage unit rental: While in between places or on prolonged house-hunting trips, you may need to pay for a short—or long-term storage facility for your belongings.
• Cleaning services: You’ll likely have to hire professional cleaners to help you save time by clearing out your old place or cleaning up your new abode.
• Moving truck rentals: For DIY moves, the cost of a moving truck counts as a potential moving expenses deduction in your tax returns.

How do Moving Expenses Deductions Apply to Taxpayers?

If you’re active military personnel, you may be able to claim a moving expense deduction against your taxable income, indicated on the Form 3903 you submit alongside Form 1040.

The moving expenses claims are only valid if your move resulted from a military order or a permanent change of station.

Because of existing federal legislation, most other taxpayers can’t deduct moving expenses for the 2018-2025 tax years. For them, such expenses are personal and non-deductible. Still, if you moved before 2018, you may be able to file an amended tax return to deduct moving expenses for the unclaimed period.

You also can’t deduct moving expenses reimbursed or directly funded by the government. But, if the reimbursements don’t cover your out-of-pocket expenses, you may seek to claim moving expenses deductions for the deficit.

How to Know Which Moving Expenses Qualify for Deduction

To understand which moving expenses qualify for a deduction in your Form 3903, you need to consider these factors:

1. State-By-State Tax Deductions

While federal laws only allow moving expense reimbursements and deductions for active military members, certain states, such as New York, operate differently.

Some states have separate legislation with their independent interpretation of the federal tax changes. You should check your local Internal Revenue codes for a possible moving expense deduction, even if they’re not listed in your federal tax return.

2. Time Test

To qualify for a moving expense deduction, the move must be timed as close as possible to the start of your new employment period. You’ll have to start your new job while working full-time for at least 39 weeks within the first year after your move.

There are exceptions to this criteria if you have to relocate for work well before your spouse or family. This caveat applies in special situations like ongoing medicare care for a spouse or a child finishing school near your old home.

3. Distance Test

The second main qualifying condition for the moving expense deduction is the distance between your old and new home. To claim a moving expense deduction or reimbursement in your federal income tax, the distance between both places must be at least 50 miles.

This means that if you lived in a house 15 miles from your workplace, your new workplace would have to be at least 65 miles from your old home.

Once again, there are exceptions for U.S. military personnel who have permanently changed status, such as retirement or service termination.

4. Employer Reimbursements

Since the 2017 Jobs Act took force, employer reimbursements have counted as taxable income for most employees.

So, if your employer has reimbursed you for moving as a non-military taxpayer, your tax bill will go up, reflecting as gross income in your W-2 form. You’ll also be required to pay Medicare and Social Security tax on such reimbursements.

For employers, this implies an increased burden that reduces the financial benefit of making a move. Still, you may get lucky, as the practice in some organizations is to “gross up” the reimbursements, increasing their value to make up for potential tax liability.

5. Reasonable Moving Expenses

Depending on where you reside, you may be able to claim moving expenses on state returns that don’t follow the federal Internal Revenue Code, as long as the costs are deemed “reasonable”.

Here are a few kinds of moving expenses that may qualify for a deduction:

• Packing and shipping costs
• Safe storage for up to 30 days while in transit
• Pet shipping
• Utilities connection and disconnection at the new and old residences

Navigating Moving Expenses Deductions as a Physician

As a doctor or surgeon, your dynamic and demanding career means increased chances for better opportunities, often involving relocating. Even if your moving expenses are non-deductible, keeping a due record of all your moving-related costs is important as it helps streamline your tax filing.

If you’re a new physician transitioning from medical school to residency or fellowship, you’ll be taxed when relocating your household goods and personal items. If your new employer reimburses you, it’s important to be aware of the federal tax implications of the occurrence.

What Can Physicians Thrive Do For You

The experts at Physicians Thrive can help you smooth the finer legal details of your new employment contract and moving expenses while you settle into fresh surroundings.

As a financial consulting organization specializing in physician clients, we provide services involving:

• Contract reviews: These include thorough contract reviews to assess terms, benefits, and compensation and ensure fair treatment and protection of financial interests.
• Retirement planning: With the right growth strategies, your higher earnings as a physician will allow you to plan for retirement with savings plans, retirement savings accounts, and other investment options.
• Achieving private practice: Physicians also get access to resources on financial planning and business guidance, which can help them achieve their private practice dreams.
• Disability insurance: As a physician, you’ll be guided on disability insurance solutions that protect your income in case of injury or illness.

Wrapping Up

Per federal law, you may not claim moving expenses deductions for the 2018-2025 tax period except if you’re an active member of the military. Still, your new employer may offer reimbursements, which also have tax implications.

As a physician, your busy profession means that you may not always have the opportunity to give your tax filing the attention it deserves.

Partnering with a financial planner like Physicians Thrive takes the stress off your hands and provides quality advice to help you make better financial choices.

Check out our tax planning services!