Publication 17: Your Federal Income Tax; Chapter 19

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Table of Contents

What's New

Standard mileage rate. The standard mileage rate for moving expenses has been increased from 12 cents a mile in 2003 to 14 cents a mile in 2004. See Travel by car under Deductible Moving Expenses.

Reminder

Change of address. If you change your mailing address, be sure to notify the IRS using Form 8822, Change of Address. Mail it to the Internal Revenue Service Center for your old address. Addresses for the Service Centers are on the back of the form.

Introduction

This chapter explains the deduction of certain expenses of moving to a new home because you changed job locations or started a new job. It includes the following topics.

Who can deduct moving expenses.
What moving expenses are deductible.
What moving expenses are not deductible.
How a reimbursement affects your moving expense deduction.
How and when to report moving expenses.
Special rules for members of the Armed Forces.

You may be able to deduct moving expenses whether you are self-employed or an employee. Your expenses generally must be related to starting work at your new job location. However, certain retirees and survivors may qualify to claim the deduction even though they are not starting work at a new job location. See Who Can Deduct Moving Expenses.

Moves to locations outside the United States. This chapter does not discuss moves outside the United States. If you are a United States citizen or resident alien who moved outside the United States or its possessions because of your job or business, see Publication 521, Moving Expenses, for special rules that apply to your move.

Useful Items - You may want to see:

Publication

521 Moving Expenses

Form (and Instructions)

3903
Moving Expenses
8822
Change of Address

Who Can Deduct Moving Expenses

You can deduct your moving expenses if you meet all three of the following requirements.

Your move is closely related to the start of work.
You meet the distance test.
You meet the time test.

After you have read these rules, you may want to use Figure 19-B to help you decide if you can deduct your moving expenses.

Different rules may apply if you are a member of the Armed Forces or a retiree or survivor moving to the United States. These rules are discussed later in this chapter.

Related to Start of Work

Your move must be closely related, both in time and in place, to the start of work at your new job location.

Closely related in time. You can generally consider moving expenses incurred within 1 year from the date you first reported to work at the new location as closely related in time to the start of work. It is not necessary that you arrange to work before moving to a new location, as long as you actually do go to work.

If you do not move within 1 year of the date you begin work, you ordinarily cannot deduct the expenses unless you can show that circumstances existed that prevented the move within that time.

Example.

Your family moved more than a year after you started work at a new location. You delayed the move for 18 months to allow your child to complete high school. You can deduct your moving expenses.

Closely related in place. You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location is not more than the distance from your former home to the new job location. If your move does not meet this requirement, you may still be able to deduct moving expenses if you can show that:

You are required to live at your new home as a condition of your employment, or
You will spend less time or money commuting from your new home to your new job location.

Home defined. Your home means your main home (residence). It can be a house, apartment, condominium, houseboat, house trailer, or similar dwelling. It does not include other homes owned or kept up by you or members of your family. It also does not include a seasonal home, such as a summer beach cottage. Your former home means your home before you left for your new job location. Your new home means your home within the area of your new job location.

Retirees or survivors. You may be able to deduct the expenses of moving to the United States or its possessions even though the move is not related to the start of work at a new job location. You must have worked outside the United States or be a survivor of someone who did. See Retirees or Survivors Who Move to the United States, later.

Distance Test

Your move will meet the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. For example, if your old main job location was 3 miles from your former home, your new main job location must be at least 53 miles from that former home. You can use Worksheet 19-1 to see if you meet this test.

The distance between a job location and your home is the shortest of the more commonly traveled routes between them. The distance test considers only the location of your former home. It does not take into account the location of your new home. See Figure 19-A.

Worksheet 19-1. Distance Test

Keep for your Records

	Note. Members of the armed forces may not have to meet this test. See Members of the Armed Forces.
1.	Enter the number of miles from your old home to your new workplace	1.	miles
2.	Enter the number of miles from your old home to your old workplace	2.	miles
3.	Subtract line 2 from line 1. If zero of less, enter -0-	3.	miles
4.	Is line 3 at least 50 miles? □ Yes. You meet this test. □ No. You do not meet this test. You cannot deduct your moving expenses.

Example.

You moved to a new home less than 50 miles from your former home because you changed main job locations. Your old main job location was 3 miles from your former home. Your new main job location is 60 miles from that home. Because your new main job location is 57 miles farther from your former home than the distance from your former home to your old main job location, you meet the distance test.

First job or return to full-time work. If you go to work full time for the first time, your place of work must be at least 50 miles from your former home to meet the distance test.

If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work must also be at least 50 miles from your former home.

Armed Forces. If you are in the Armed Forces and you moved because of a permanent change of station, you do not have to meet the distance test. See Members of the Armed Forces, later.

Main job location. Your main job location is usually the place where you spend most of your working time. If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work.

Union members. If you work for several employers on a short-term basis and you get work under a union hall system (such as a construction or building trades worker), your main job location is the union hall.

More than one job. If you have more than one job at any time, your main job location depends on the facts in each case. The more important factors to be considered are:

The total time you spend at each place,
The amount of work you do at each place, and
How much money you earn at each place.

Time Test

To deduct your moving expenses, you also must meet one of the following two time tests.

The time test for employees.
The time test for self-employed persons.

Both of these tests are explained below. See Table 19-1 for a summary of these tests.

Figure 19-A. Distance Test

Time Test for Employees

If you are an employee, you must work full time for at least 39 weeks during the first 12 months (39-week test) after you arrive in the general area of your new job location. Full-time employment depends on what is usual for your type of work in your area.

For purposes of this test, the following four rules apply.

You count only your full-time work as an employee, not any work you do as a self-employed person.
You do not have to work for the same employer for all 39 weeks.
You do not have to work 39 weeks in a row.
You must work full time within the same general commuting area for all 39 weeks.

Temporary absence from work. You are considered to have worked full time during any week you are temporarily absent from work because of illness, strikes, lockouts, layoffs, natural disasters, or similar causes. You are also considered to have worked full time during any week you are absent from work for leave or vacation provided for in your work contract or agreement.

Seasonal work. If your work is seasonal, you are considered to be working full time during the off-season only if your work contract or agreement covers an off-season period of less than 6 months. For example, a school teacher on a 12-month contract who teaches on a full-time basis for more than 6 months is considered to have worked full time for the entire 12 months.

Time Test for Self-Employed Persons

If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months (78-week test) after you arrive in the general area of your new job location.

For purposes of the time test for self-employed persons, the following three rules apply.

You count any full-time work you do either as an employee or as a self-employed person.
You do not have to work for the same employer or be self-employed in the same trade or business for the 78 weeks.
You must work within the same general commuting area for all 78 weeks.

Table 19–1. Satisfying the Time Test for Employees and Self-Employed Persons

IF you are...	THEN you satisfy the time test by meeting the...
an employee	39-week test for employees.
both self-employed and an employee, but unable to satisfy the 39-week test for employees	78-week test for self-employed persons.
both self-employed and an employee at the same time	78-week test for a self-employed person or the 39-week test for an employee. Your principal place of work determines which test applies.
self-employed	78-week test for self-employed persons.

Table 19–1. Satisfying the Time Test for Employees and Self-Employed Persons

IF you are...	THEN you satisfy the time test by meeting the...
an employee	39-week test for employees.
both self-employed and an employee, but unable to satisfy the 39-week test for employees	78-week test for self-employed persons.
both self-employed and an employee at the same time	78-week test for a self-employed person or the 39-week test for an employee. Your principal place of work determines which test applies.
self-employed	78-week test for self-employed persons.

Self-employment. You are self-employed if you work as the sole owner of an unincorporated business or as a partner in a partnership carrying on a business. You are not considered self-employed if you are semiretired, are a part-time student, or work only a few hours each week.

Full-time work. You can count only those weeks during which you work full time as a week of work. Whether you work full time during any week depends on what is usual for your type of work in your area.

If you were both an employee and self-employed, see Table 19-1 for the requirements.

Joint Return

If you are married and file a joint return and both you and your spouse work full time, either of you can satisfy the full-time work test. However, you cannot add the weeks your spouse worked to the weeks you worked to satisfy that test.

Time test not yet met. You can deduct your moving expenses on your 2004 tax return even though you have not yet met the time test by the date your 2004 return is due. You can do this if you expect to meet the 39-week test in 2005, or the 78-week test in 2005 or 2006. If you deduct moving expenses but do not meet the time test in 2005, or 2006, you must either:

Report your moving expense deduction as other income on your Form 1040 for the year you cannot meet the test, or
Amend your 2004 return.

If you do not deduct your moving expenses on your 2004 return and you later meet the time test, you can file an amended return for 2004 to take the deduction.

Figure 19-B. Qualifying Moves

Exceptions to the Time Test

You do not have to meet the time test if one of the following applies.

You are in the Armed Forces and you moved because of a permanent change of station. See Members of the Armed Forces, later.
Your main job location was outside the United States and you moved to the United States because you retired. See Retirees or Survivors Who Move to the United States, later.
You are the survivor of a person whose main job location at the time of death was outside the United States. See Retirees or Survivors Who Move to the United States, later.
Your job at the new location ends because of death or disability.
You are transferred for your employer's benefit or laid off for a reason other than willful misconduct. For this exception, you must have obtained full-time employment and you must have expected to meet the test at the time you started the job.

Members of the Armed Forces

If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you do not have to meet the distance and time tests, discussed earlier. You can deduct your unreimbursed moving expenses.

A permanent change of station includes:

A move from your home to your first post of active duty,
A move from one permanent post of duty to another, and
A move from your last post of duty to your home or to a nearer point in the United States. The move must occur within 1 year of ending your active duty or within the period allowed under the Joint Travel Regulations.

Spouse and dependents. If a member of the Armed Forces dies, is imprisoned, or deserts, a permanent change of station for the spouse or dependent includes a move to:

The place of enlistment,
The member's, spouse's, or dependent's home of record, or
A nearer point in the United States.

If the military moves you and your spouse and dependents to or from separate locations, the moves are treated as a single move to your new main job location.

More information. For more information on moving expenses for members of the Armed Forces, and instructions for completing Form 3903, see Members of the Armed Forces in Publication 521.

Retirees or Survivors Who Move to the United States

If you are a retiree who was working abroad or a survivor of a decedent who was working abroad and you move to the United States or one of its possessions, you do not have to meet the time test, discussed earlier. However, you must meet the requirements discussed below under Retirees who were working abroad or Survivors of decedents who were working abroad.

If you are living in the United States, retire, and then move and remain retired, you cannot claim a moving expense deduction for that move.

United States defined. For this section of this chapter, the term “United States” includes the possessions of the United States.

Retirees who were working abroad. You can deduct moving expenses for a move to a new home in the United States when you permanently retire. However, both your former main job location and your former home must have been outside the United States.

Permanently retired. You are considered permanently retired when you cease gainful full-time employment or self-employment. If, at the time you retire, you intend your retirement to be permanent, you will be considered retired though you later return to work. Your intention to retire permanently may be determined by:

Your age and health,
The customary retirement age for people who do similar work,
Whether you receive retirement payments from a pension or retirement fund, and
The length of time before you return to full-time work.

Survivors of decedents who were working abroad. If you are the spouse or the dependent of a person whose main job location at the time of death was outside the United States, you can deduct moving expenses if the following five requirements are met.

The move is to a home in the United States.
The move begins within 6 months after the decedent's death. (When a move begins is described later.)
The move is from the decedent's former home.
The decedent's former home was outside the United States.
The decedent's former home was also your home.

When a move begins. A move begins when one of the following events occurs.

You contract for your household goods and personal effects to be moved to your home in the United States, but only if the move is completed within a reasonable time.
Your household goods and personal effects are packed and on the way to your home in the United States.
You leave your former home to travel to your new home in the United States.

Deductible Moving Expenses

If you meet the requirements discussed earlier under Who Can Deduct Moving Expenses, you can deduct the reasonable expenses of:

Moving your household goods and personal effects (including in-transit or foreign-move storage expenses), and
Traveling (including lodging but not meals) to your new home.

You cannot deduct any expenses for meals.

Reasonable expenses. You can deduct only those expenses that are reasonable for the circumstances of your move. For example, the cost of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. If, during your trip to your new home, you stop over, or make side trips for sightseeing, the additional expenses for your stopover or side trips are not deductible as moving expenses.

Travel by car. If you use your car to take yourself, members of your household, or your personal effects to your new home, you can figure your expenses by deducting either:

Your actual expenses, such as gas and oil for your car, if you keep an accurate record of each expense, or
The standard mileage rate of 14 cents a mile.

Whether you use actual expenses or the standard mileage rate to figure your expenses, you can deduct parking fees and tolls you paid in moving. You cannot deduct any part of general repairs, general maintenance, insurance, or depreciation for your car.

Member of household. You can deduct moving expenses you pay for yourself and members of your household. A member of your household is anyone who has both your former and new home as his or her home. It does not include a tenant or employee, unless that person is your dependent.

Location of move. There are different rules for moving within or to the United States than for moving outside the United States. This chapter only discusses moves within or to the United States. The rules for moves outside the United States can be found in Publication 521.

Household Goods and Personal Effects

You can deduct the cost of packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home.

If you use your own car to move your things, see Travel by car, earlier.

You can deduct any costs of connecting or disconnecting utilities required because you are moving your household goods, appliances, or personal effects.

You can deduct the cost of shipping your car and household pets to your new home.

You can deduct the cost of moving your household goods and personal effects from a place other than your former home. Your deduction is limited to the amount it would have cost to move them from your former home.

You cannot deduct the cost of moving furniture you buy on the way to your new home.

Storage expenses. You can include the cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home.

Travel Expenses

You can deduct the cost of transportation and lodging for yourself and members of your household while traveling from your former home to your new home. This includes expenses for the day you arrive.

You can include any lodging expenses you had in the area of your former home within one day after you could no longer live in your former home because your furniture had been moved.

You can deduct expenses for only one trip to your new home for yourself and members of your household. However, all of you do not have to travel together or at the same time. If you use your own car, see Travel by car, earlier.

Nondeductible Expenses

You cannot deduct the following items as moving expenses.

Any part of the purchase price of your new home.
Car tags.
Driver's license.
Expenses of buying or selling a home.
Expenses of getting or breaking a lease.
Home improvements to help sell your home.
Loss on the sale of your home.
Losses from disposing of memberships in clubs.
Meal expenses.
Mortgage penalties.
Pre-move househunting expenses.
Real estate taxes.
Refitting of carpets and draperies.
Security deposits (including any given up due to the move).
Storage charges except those incurred in transit and for foreign moves.
Temporary living expenses.

No double deduction. You cannot take a moving expense deduction and a business expense deduction for the same expenses. You must decide if your expenses are deductible as moving expenses or as business expenses. For example, expenses you have for travel, meals, and lodging while temporarily working at a place away from your regular place of work may be deductible as business expenses if you are considered away from home on business. Generally, your work at a single location is considered temporary if it is realistically expected to last (and does in fact last) for 1 year or less. See Temporary Assignment or Job in chapter 28 for information on deducting your expenses.

How and When To Report

This section explains how and when to report your moving expenses and any reimbursements or allowances you received for your move.

Form 3903. Use Form 3903 to figure your moving expense deduction.

Where to deduct. Deduct your moving expenses on line 29 of Form 1040. The amount of moving expenses you can deduct is shown on line 5 of Form 3903.

You cannot deduct moving expenses on Form 1040EZ or Form 1040A.

Reimbursements. If you receive a reimbursement for your moving expenses, how you report this amount and your expenses depends on whether the reimbursement is paid to you under an accountable plan or a nonaccountable plan.

For more information on reimbursements, see Publication 521.

When To Deduct Expenses

You may have a choice of when to deduct your moving expenses and report any reimbursement.

Expenses not reimbursed. If you were not reimbursed, deduct your allowable moving expenses either in the year you incurred them or in the year you paid them.

Example.

In December 2003, your employer transferred you to another city in the United States, where you still work. You are single and were not reimbursed for your moving expenses. In 2003, you paid for moving your furniture and you deducted these expenses on your 2003 tax return. In January 2004, you paid for travel to the new city. You can deduct these additional expenses on your 2004 tax return.

Expenses reimbursed. If you are reimbursed for your expenses, you may be able to deduct your expenses either in the year you incurred them or in the year you paid them. If you use the cash method of accounting, you can choose to deduct the expenses in the year you are reimbursed even though you paid the expenses in a different year.

If you are reimbursed for your expenses in a year after you paid the expenses, you may want to delay taking the deduction until the year you receive the reimbursement. If you do not choose to delay your deduction until the year you are reimbursed and you deduct moving expenses that will be reimbursed, you must include the reimbursement in your income.

Choosing when to deduct. If you use the cash method of accounting, which is used by most individuals, you can choose to deduct moving expenses in the year your employer reimburses you if:

You paid the expenses in a year before the year of reimbursement, or
You paid the expenses in the year immediately after the year of reimbursement but by the due date, including extensions, for filing your return for the reimbursement year.

How to make the choice. You choose to deduct moving expenses in the year you received reimbursement by taking the deduction on your return, or amended return, for that year.

You cannot deduct any moving expenses for which you received a reimbursement that was not included in your income. (Reimbursements are discussed in Publication 521.)

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Chapter 19 - Moving Expenses