California Differences - Moving Expenses
California conforms to the pre-TCJA Federal treatment of moving expenses as an adjustment to income.
New FTB Form 3913
Effective for 2021 returns, the deduction for California moving expenses needs to be reported on new form FTB 3913, which is patterned after the federal Form 3903 that was used prior to 2018.
For members of the Armed Forces, the instructions to form FTB 3913 say that “generally the amount of moving expense deducted for federal and California should be the same and that is why no state adjustment is needed on Schedule CA.”
Part-Year CA Residents
The following rules apply to part-year residents. If the taxpayer moved:
Into California:
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Into California in connection with a new job, the moving expenses are deductible., For non-military taxpayers, after completing form FTB 3913, and:
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Reimbursements exceed the moving expenses (checked the No box on line 5 of form FTB 3913), enter the amount from line 5 of form FTB 3913 on Schedule CA (540NR), Part II, Section A, line 1, column C.
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Moving expenses exceed reimbursements (checked the Yes box on line 5 of form FTB 3913), enter the amount from line 5 of form FTB 3913 on Schedule CA (540NR), Part II, line 14, column C.
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Out of California:
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Out of California in connection with a new job, the moving expenses are not deductible in CA. When completing the Part-Year Resident Schedule CA, enter zero on line 14
*, column E.
Exception - If the taxpayer moved out of California in connection with a new job and received compensation from that job attributable to a California source, the moving expense adjustment will be limited by the ratio of California source compensation from the new job to total compensation from the new job.
* 2021 version of Sch CA (540NR)
A taxpayer moving into California who has taxable moving expense reimbursement will treat that income as California-source income, while a taxpayer moving out of California who is not a California resident after the move would treat any taxable moving expense reimbursement as non-California source income.
Time Test Examples for CA
Example - Moving Distance Test Violated: In 2022Lance lived in City A but commuted 60 miles to his job in City B. He got a new job and moved to City C, which is 90 miles from City A. Since the difference between the old commute and the new commute is only 30 miles, the move is not qualified under the distance test.
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Example - Moving Distance Test Met: In 2022Rita lived in Town A and commuted each day to her job in Town B, a distance of 30 miles. She got a new job and moved to Town C, which is 90 miles from Town A. The difference between the old 30-mile commute and the distance from the old home to the new job (90 miles) is 60 miles. This move qualifies under the distance test.