Publication 54 |
2000 Tax Year |
Moving Expenses
If you moved to a new home in 2000 because of your job or business,
you may be able to deduct the expenses of your move. To be deductible,
the moving expenses must have been paid or incurred in connection with
starting work at a new job location.
Requirements
You may be able to deduct moving expenses if you meet the following
requirements.
Distance
The distance from your new job location to your former home must be
at least 50 miles more than the distance from your old job
location to your former home. If you did not have an old job location,
your new job location must be at least 50 miles from your former home.
Time
You must work full time for at least 39 weeks during the first
12 months after you move. If you are self-employed, you must
work full time for at least 39 weeks during the first 12 months
AND for at least 78 weeks during the first 24 months
after you move.
Retirees.
You can deduct your allowable moving expenses if you move to the
United States when you permanently retire if your principal place of
work and former home were outside the United States and its
possessions. You do not have to meet the time test. The other
requirements must be met.
Survivors.
You can deduct moving expenses for a move to a home in the United
States if you are the spouse or dependent of a person whose principal
place of work at the time of death was outside the United States or
its possessions. The move must begin within 6 months after the
decedent's death and must be from the decedent's former home outside
the United States in which you lived with the decedent at the time of
death. You are not required to meet the time test. The other
requirements must be met.
Closely Related to
the 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.
In general, moving expenses incurred within one year from the date
you first reported to work at the new location are considered closely
related in time to the start of work.
If you do not move within one year, 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. Their move was delayed because you allowed your child to
complete high school. You can deduct your allowable moving expenses.
Closely related in place.
A move is generally considered 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. A move that does not meet this requirement may
qualify if you can show that:
- A condition of employment requires you to live at your new
home, or
- You will spend less time or money commuting from your new
home to your new job.
Deductible Expenses
You can only deduct certain expenses.
Reasonable expenses.
You can only deduct expenses that are reasonable for the
circumstances of your move. The cost of traveling from your former
home to your new one should be by the shortest, most direct route
available by conventional transportation.
Reimbursements.
If you are reimbursed by your employer for allowable moving
expenses, these reimbursements may have been excluded from your
income. You cannot deduct moving expenses for which you were
reimbursed by your employer unless the reimbursement was included in
your income.
Deductible moving expenses.
Some of the moving expenses that you may be able to deduct include
the reasonable costs of:
- Moving household goods and personal effects (including
packing, crating, in-transit storage, and insurance) of both you and
members of your household. For foreign moves,
costs of moving household goods and personal effects include
reasonable expenses of moving the items to and from storage and
storing them while your new place of work abroad is your principal
place of work.
- Transportation and lodging for yourself and members of your
household for one trip from your former home to your new home
(including costs of getting passports).
Members of your household.
A member of your household includes 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.
Foreign moves.
A foreign move is a move in connection with the start of work at a
new job location outside the United States and its possessions. A
foreign move does not include a move back to the United States or its
possessions.
Allocation of Moving Expenses
When your new place of work is in a foreign country, your moving
expenses are directly connected with the income earned in that foreign
country. If all or part of the income that you earn at the new
location is excluded under the foreign earned income exclusion or the
housing exclusion, the part of your moving expense that is allocable
to the excluded income is not deductible.
Also, if you move from a foreign country to the United States and:
- You are reimbursed for your move by your employer,
- You are able to treat the reimbursement as compensation for
services performed in the foreign country, and
- You choose to exclude your foreign earned income,
you cannot deduct the part of the moving expense that is
related to the excluded income.
The moving expense is connected with earning the income (including
reimbursements, as discussed in chapter 4
under Reimbursement of
moving expenses) either entirely in the year of the move or in 2
years. It is connected with earning the income entirely in the year of
the move if you qualify under the bona fide residence test or physical
presence test for at least 120 days during that tax year.
If you do not qualify under either the bona fide residence test or
the physical presence test for at least 120 days during the year of
the move, the expense is connected with earning the income in 2 years.
The moving expense is connected with the year of the move and the
following year if the move is from the United States to a foreign
country, or the year of the move and the preceding year if
the move is from a foreign country to the United States.
To figure the amount of your moving expense that is allocable to
your excluded foreign earned income (and not deductible), you must
multiply your total moving expense deduction by a fraction. The
numerator (top number) of the fraction is your total excluded foreign
earned income and housing amounts for both years and the denominator
(bottom number) of the fraction is the total foreign earned income for
both years.
Example.
You are transferred by your employer as of November 1, 1999, to a
foreign country. Your tax home is in the foreign country, and you
qualify as a bona fide resident for the entire tax year 2000. In 1999
you paid $6,000 for allowable moving expenses for your move from the
United States to the foreign country. You were fully reimbursed (under
a nonaccountable plan) for these expenses in the same year. The
reimbursement is included in your income. Your only other income
consists of $14,000 wages earned in 1999 after the date of your move,
and $80,000 wages earned in the foreign country for the entire year
2000. You exclude the maximum amount under the foreign earned income
exclusion and have no housing exclusion.
Because you did not meet the bona fide residence test for at least
120 days during 1999, the year of the move, the moving expenses are
for services you performed in both 1999 and the following year, 2000.
Your total foreign earned income for both years is $100,000,
consisting of $14,000 wages for 1999, $80,000 wages for 2000, and
$6,000 moving expense reimbursement for both years.
Of this total, $88,367 is excluded, consisting of the $76,000
full-year exclusion for 2000 and a $12,367 part-year exclusion for
1999 ($74,000 times the fraction of 61 qualifying bona fide residence
days over 365 total days in the year). To find the part of your moving
expenses that is not deductible, multiply your $6,000 total expenses
by the fraction $88,367 over $100,000. The result, $5,302, is your
nondeductible amount.
You must report the full amount of the moving expense reimbursement
in the year in which you received the reimbursement. In the preceding
example, this year was 2000. You attribute the reimbursement to both
1999 and 2000 only to figure the amount of foreign earned
income eligible for exclusion for each year.
Move between foreign countries.
If you move between foreign countries and you qualified under the
bona fide residence test or the physical presence test for at least
120 days during the year of the move, your moving expense is allocable
to the income earned in the year of the move.
New place of work in U.S.
If your new place of work is in the United States, the deductible
moving expenses are directly connected with the income earned in the
United States. If you treat a reimbursement from your employer as
foreign earned income (see the discussion in chapter 4),
you must
allocate deductible moving expenses to foreign earned income.
Storage expenses.
These expenses are attributable to services you perform during the
year in which the storage expenses are incurred. The amount allocable
to excluded income is not deductible.
Recapture of Moving Expense Deduction
If your moving expense deduction is attributable to your foreign
earnings in 2 years (the year of the move and the following year), you
should request an extension of time to file your return for the year
of the move until after the end of the following year. You should then
have all the information needed to properly figure the moving expense
deduction. See Extensions under When To File and Pay
in chapter 1.
If you do not request an extension, you should figure the part of
the entire moving expense deduction that is disallowed. You do this by
multiplying the moving expense by a fraction, the numerator (top
number) of which is your excluded foreign earned income for the year
of the move, and the denominator (bottom number) of which is your
total foreign earned income for the year of the move. Once you know
your foreign earnings and exclusion for the following year, you must
either:
- Adjust the moving expense deduction by filing an amended
return for the year of the move, or
- Recapture any additional unallowable amount as income on
your return for the following year.
If, after you make the final computation, you have an
additional amount of allowable moving expense deduction, you can claim
this only on an amended return for the year of the move. You cannot
claim it on the return for the second year.
Forms to file.
Report your moving expenses on Form 3903.
Report your moving expense deduction on
line 26 of Form 1040. If you must reduce your moving expenses by the
amount allocable to excluded income as explained later under How
To Report Deductions, attach a statement to your return showing
how you figured this amount.
For more information about figuring moving expenses, see
Publication 521.
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