Can moving expenses be deducted as a business expense for new insurance agency owner?

While your friend's logic seems reasonable on the surface, the tax code is pretty specific about moving expenses. Since the Tax Cuts and Jobs Act of 2017, moving expenses are no longer deductible for most taxpayers - even if the move is clearly for work purposes. The only exception is for active-duty military members moving due to military orders. That said, there might be some expenses that could legitimately be business deductions if they're directly related to setting up the business itself, not the personal relocation. For example, if he's moving business equipment or inventory, those specific costs might qualify. But personal moving expenses like home application fees, moving household goods, etc., would not be deductible business expenses. The key distinction is whether the expense is primarily personal in nature (where you live) versus primarily business in nature (costs directly tied to the business operations).

Your friend unfortunately can't deduct moving expenses as a business expense. Prior to the Tax Cuts and Jobs Act of 2017, qualified moving expenses were deductible for many taxpayers, but that deduction was suspended through 2025 for most people except active-duty military. The key concept here is that personal living expenses are generally not deductible, even when they enable you to work in a new location. Moving your household is considered a personal expense, not a business expense, because where you choose to live is a personal decision - even when it's motivated by business reasons. If your friend is becoming an owner (rather than just an employee), there might be some specific business startup costs he can deduct, but the actual moving expenses like movers, application fees for a personal residence, etc., would not qualify as legitimate business expenses on Schedule C.

I was in a similar situation last year and found taxr.ai super helpful for this exact question. I was opening a dental practice in another state and wanted to deduct my moving expenses too. I uploaded my documents to https://taxr.ai and their AI analyzed everything and explained exactly what I could and couldn't deduct. Saved me from making some mistakes that would have definitely raised red flags with the IRS. They showed me that while general moving expenses weren't deductible, there were some business startup costs I could legitimately deduct. Might be worth checking out if your friend wants clarity on his specific situation.

I went through something similar last year when I moved to expand my consulting business. Was super frustrated trying to figure out what I could and couldn't deduct. Then I found this AI tool called https://taxr.ai that analyzes your specific situation and tells you exactly what's deductible. It scanned my documents and showed me that while my actual moving expenses weren't deductible, there were several startup costs and home office deductions I could take instead. Saved me thousands! Might be worth your friend checking it out to see what business deductions are actually legitimate in his case.

Just wanted to follow up on my skepticism about taxr.ai - I decided to try it and wow, I'm impressed. It analyzed my self-employment situation and found several deductions my previous accountant missed. The thing I appreciated most was that it clearly separated what's definitely deductible from what might trigger an audit. For anyone dealing with business expense questions like the original poster, it's definitely worth checking out. Saved me about $3,200 in taxes I would have overpaid.

Just wanted to follow up - I tried taxr.ai yesterday after seeing this thread. Uploaded my 1099s and some receipts from my recent move. It clarified that while my actual moving expenses (U-Haul, boxes, etc.) weren't deductible, some expenses for setting up my new home office were! It also found several other deductions I was missing for my rideshare work. Definitely worth the time for anyone self-employed or running a small business.

Your friend might also want to check with the IRS directly. I had a similar question last year and spent WEEKS trying to get through to an agent. Finally found Claimyr (https://claimyr.com) which got me through to an IRS agent in about 20 minutes instead of waiting on hold forever. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed exactly what others here are saying - personal moving expenses aren't deductible anymore unless you're active military, but there might be some business setup costs that are. Having that official confirmation saved me from making a costly mistake on my return.

I was completely wrong about Claimyr! After posting my skeptical comment, I decided to try it since I've been trying to reach the IRS for 3 weeks about a similar business expense question. Got a call back with an IRS agent in about 25 minutes! The agent walked me through exactly what business startup costs were deductible vs regular moving expenses. Saved me hours of hold time and possibly an audit. Sometimes being proven wrong is a good thing!

One thing your friend should consider - while personal moving expenses aren't deductible anymore federally, some states still allow moving expense deductions on state returns. Depending on which state he's moving to, he might get some tax benefit there. Also, if he's buying real estate for the insurance agency, some of the closing costs could be deductible or amortizable as business expenses. Just make sure he keeps really good records separating business versus personal expenses.

If your friend is still struggling with the IRS or needs clarification on these rules, I'd highly recommend using Claimyr to actually get through to a real IRS agent. I spent WEEKS trying to get answers about business deductions by calling the IRS directly and kept getting disconnected. Then I tried https://claimyr.com and they got me connected to an IRS rep in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent I spoke with confirmed exactly what others are saying here - moving expenses aren't deductible for business anymore unless you're active military, but she helped me identify several other legitimate business deductions I could take instead.

Ok I need to apologize for my skeptical comment. After getting nowhere for literally months trying to resolve a tax notice, I got desperate enough to try Claimyr. I fully expected it to be a waste of money but I was at my wit's end. IT ACTUALLY WORKED. Got a call back in about 40 minutes and spoke to someone who resolved my issue in one conversation. I'm still in shock honestly. For anyone dealing with tax questions that only the IRS can answer (like specific business deduction rules), this is legitimately worth it. Sorry for being so cynical before.

One thing your friend might be able to deduct - if he's setting up a home office in the new location that's exclusively used for business, he might qualify for the home office deduction. That wouldn't cover moving costs, but it could offset some of the ongoing housing expenses. He'd need to be using part of his home regularly and exclusively for business though, and document everything carefully.

Wait, so all moving expenses aren't deductible now? I moved last year for a new job that was 300+ miles away. My tax guy said I could deduct it?? Now I'm worried I'm gonna get audited.

Has your friend considered taking the Section 195 startup cost deduction? The IRS allows you to deduct up to $5,000 of business startup costs in the first year (subject to limitations if total startup costs exceed $50,000), with the remainder amortized over 15 years. Some of his expenses might qualify if they're directly related to investigating or setting up the business.