ROSSITER RELOCATION SERVICES

For questions or assistance, call us at (800) 272-0786

TAX DEDUCTIBLE MOVING EXPENSES

 Should you need additional assistance in determining if your expenses meet the test, we recommend that you contact the nearest Internal Revenue Service office for specific information, as well as copies of IRS forms and publications.  You can depend on Rossiter Relocation for knowledge and experience in helping you prepare for your move.  We'll be happy to assist you by answering questions and working closely with you to make your relocation as effortless as possible.

NOTE -The information contained in this booklet is not applicable to moves before the 1998 tax year.
Because federal laws change frequently, you always should consult the Internal Revenue Service or your personal tax adviser for the most current information about your particular situation.

Do You Qualify?

If your move was caused by a change in the location of your employment (either as a result of a transfer by your current employer or your acceptance of a new job), you may deduct as an adjustment to gross income reasonable moving expenses if the following conditions are met:

1. The change in job location requires you to commute at least 50 miles (one way) farther to work than if you had not moved.  College students may qualify when moving to start their first full-time job if that job is at least 50 miles from their former "legal" home.   To determine if you meet the distance requirement, your "legal" home would be with your parents or guardians if they claim you as a dependent on their income tax return.  If you file your taxes as an independent, your "legal" home would be your residence before moving.  A home may include a house, apartment, condominium, mobile home or houseboat.  Seasonal homes are excluded.

2. The move occurs within one year of the date you begin work at the new location.

3. You work full time (for any employer) in the general vicinity of the new location for at least 39 weeks during the 12-month period following the move.  If you are transferred, laid off, or become disabled before the end of the 39-week period, you still may claim moving expenses.  If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and a total of at least 78 weeks during the 24 months immediately after you move.

NOTE - Special rules may apply to members of the armed forces, retirees and survivors of deceased family members who lived outside the United States.  Consult the IRS for details.

Deductible Expenses

If you meet the preceding qualifications, the following deductions may apply if you moved within the United States or from a foreign country into U.S. territory.

Household Goods

You can deduct the cost of packing, crating and transporting your family's personal effects from your former place of residence to your new one.  Moving expenses also can include the transportation of your automobile and pets, and the cost of valuation and in-transit storage.  The deduction of in-transit storage expenses is limited to the cost of 30 consecutive days of storage after your goods are picked up.

Travel

The cost of your personal, one-way transportation and lodging can be deducted.  The trip should be
the shortest, most direct route available for the type of transportation selected.  It is not necessary that all family members travel at the same time.

In General

If you are self-employed, you may deduct the aforementioned expenses if you already have made specific arrangements to operate your business at a new location.  There is no cap on the maximum deduction allowed for transporting household goods or for a family's travel costs en route to the destination.

Non-Deductible Expenses

Non-deductible moving-related expenses include the following:

• Meals while moving from the old residence to the new one.

• Pre-move house hunting trips.

• Temporary housing prior to moving into permanent housing.

• Costs of selling, buying or leasing homes as a result of the move.

• Deposits lost due to damage or neglected cleaning.

• Deposits required when entering a new lease.

• Home improvements.

• Licenses for drivers and automobiles.

• Lost club membership dues.

• Loss on the sale of your home.

• Mortgage penalties.

• Real-estate taxes. (Instead of a moving expense, these taxes would be listed as an itemized
  deduction on Schedule A.)

• Refitted carpets and draperies.

How Are Moving Expenses Reported?

Moving expenses are deductible only as an adjustment to gross income.  To support your claim for deductions, use Internal Revenue Service Form 3903 - "Moving Expenses" - which shows the type and amount of moving expenses incurred. 

All reimbursements you receive in connection with your move, if deductible, will not be included in your gross income for the year in which they were paid to you.   If not deductible, they will be included in your income.  Your employer must furnish a detailed breakdown of any reimbursements paid to you as moving expenses.

If you are not reimbursed by your employer or if you are self-employed, claim the deductible expenses "above the line."  That means you'll take the deduction on Page 1 of Form 1040 rather than itemizing deductions as in the past.

If you use your own automobile in transporting your household goods and/or your family to the new location, you can compute its operating cost in one of two ways:

• By keeping a record of actual out-of-pocket expenses for gas and oil that lists dates of travel and odometer readings; or

• By verifying the miles traveled with a list of dates and odometer readings, and deducting 10 cents per mile.

Add any parking fees and tolls to your travel and lodging costs.

General Information

Ask for and keep dated receipts of all of your moving expenses as documentation in preparing your income tax form.

If you have paid your moving expenses but haven't met the 39-week residency requirement by the time your tax return is due, you can take the deduction now if you expect to meet the residency requirement.  Or, you may omit the deduction and file an amended return (Form 1040X) for a refund after you have met the residency test.

Keep all papers pertaining to your move that you received from the moving company, such as the Bill of Lading and an Additional Services Performed form, if any.  They will be needed when you claim your tax deductions.

You might want to consult an accountant about how moving expenses could affect your income taxes.  If a company reimbursed your non-deductible moving expenses, this could increase your tax liability.  You might want to consider altering your W-4 form now to have extra money withheld. 

To help you file tax information on the sale of a home, request Publication 523, Schedule D and Form 2119 from the IRS.  For more information on filing moving expenses, request from the IRS Publication 521 and Form 3903. 

Tax forms and publications may be obtained by calling your nearest IRS office or the IRS Federal Tax Forms Service at (800) 829-3676.  They also may be obtained via the IRS Internet site:  www.irs.ustreas.gov.  In addition, libraries, banks, post offices and other government offices often have some of the forms used for filing federal income tax returns.

Moving Expenses Checklist

Records pertaining to your move should be kept in one place and retained for at least three years.  They include:

Mover's Documents

• Bill of Lading
• Inventory
• Additional Services Performed form

Travel Expense Receipts

• Personal transportation costs (air, bus or train fares, and/or automobile expenses)
• Lodging

IRS Tax Forms & Information

• W-2 Wage & Tax Statement (from employer)

• 4782 Employee Moving Expense Information (from employer)

• 1040 U.S. Individual Income Tax Return

• Schedule A - Itemized Deductions

• Schedule D - Capital Gains & Losses

• Form 2119 - Sale of Your Home

• Form 3903 - Moving Expenses

• Publication 521 - Moving Expenses

• Publication 523 - Tax Information on Selling Your Home

• Publication 530 - Tax Information for Homeowners

• Publication 553 - Highlights of Tax Changes

To order federal tax forms and publications, call your nearest IRS office or (800) 829-3676.  Questions may be directed to your local IRS office or the national office at (800) 829-1040.

NOTE:  IRS Publication 553, "Highlights of Tax Changes," is available in January of each year.  We recommend that you obtain a copy of this publication to determine if changes have been made in allowable moving expense deductions.

If you are a member of the armed forces or a civilian moving outside the United States, contact your tax adviser for specific information on qualifying for and claiming moving expenses.

Our thanks go to the Internal Revenue Service for its assistance in preparing this booklet and keeping it up-to-date.

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