Adjustments to Income

Adjusted gross income is your total income minus certain adjustments. The following two adjustments are of particular interest to members of the Armed Forces.

Individual Retirement Arrangements

For purposes of a deduction for contributions to a traditional individual retirement arrangement (IRA), Armed Forces members (including reservists on active duty for more than 90 days) are considered to be active participants in an employer-maintained retirement plan.

Generally, you can deduct the lesser of the contributions to your traditional IRA for the year or the general limit (or spousal IRA limit, if applicable). However, if you or your spouse were covered by an employer retirement plan at any time during the year for which contributions were made, you may not be able to deduct all of the contributions. The Form W-2 you or your spouse receives from an employer has a box used to indicate whether you were covered for the year. The "Pension Plan" box should have a mark in it if you were covered.

Individuals serving in the U.S. Armed Forces or in support of the U.S. Armed Forces in designated combat zones have additional time to make a qualified retirement contribution to an IRA. For more information on this extension of deadline provision, see Extension of Deadline, later. For information on IRAs, get Publication 590.

Moving Expenses

To deduct moving expenses, you generally must meet certain time and distance tests. However, members of the Armed Forces who move because of a permanent change of station do not have to meet these tests. Moving expenses are reported on Form 3903.

Permanent change of station. A permanent change of station includes:

• A move from home to the first post of active duty,
• A move from one permanent post of duty to another, and
• A move from the last post of duty to your home or to a nearer point in the United States. The move must occur within one 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 deserts, is imprisoned, or dies, a permanent change of station for the spouse or dependent includes a move to the place of enlistment or to the member's, spouse's, or dependent's home of record or a nearer point in the United States.

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

Reimbursements. Do not include in income the value of moving and storage services provided by the government in connection with a permanent change of station. Similarly, do not include in income amounts received as a dislocation allowance, temporary lodging expense, temporary lodging allowance, or move-in housing allowance. Generally, if the total reimbursements or allowances that you receive from the government because of the move are more than your qualified moving expenses, the excess is included in your wages on Form W-2. However, if any reimbursements or allowances (other than dislocation, temporary lodging, temporary lodging expense, or move-in housing allowances) exceed the cost of moving and the excess is not included in your Form W-2, the excess must be included in gross income on line 7 of Form 1040.

Use Form 3903 to deduct qualified expenses that exceed your reimbursements and allowances (including dislocation, temporary lodging, temporary lodging expense, or move-in housing allowances that are excluded from gross income.)

If you must relocate and your spouse and dependents move to or from a different location, do not include in income reimbursements, allowances, or the value of moving and storage services provided by the government to move you and your spouse and dependents to and from the separate locations.

Do not deduct any expenses for moving services that were provided by the government, or that were reimbursed to you, that you did not include in income.

Deductible moving expenses. If you meet the requirements discussed earlier, you can deduct the reasonable unreimbursed expenses that are incurred by you and members of your household.

You can deduct expenses (if not reimbursed or furnished in kind) for the following items.

1. Moving household goods and personal effects, including expenses for hauling a trailer, packing, crating, in-transit storage, and insurance. You cannot deduct expenses for moving furniture or other goods you bought on the way from the old home to the new home.
2. Travel and lodging expenses from the old home to the new home, including automobile expenses (either actual expenses or 10 cents per mile) and air fare. You cannot deduct any expenses for meals. You cannot deduct the cost of unnecessary side trips or lavish and extravagant lodging.

You can only 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.

Member of your household. A member of your household is anyone who has both your former home and your new home as his or her main home. It does not include a tenant or employee unless you can claim that person as a dependent.

Foreign moves. A foreign move is a move from the United States or its possessions to a foreign country or from one foreign country to another foreign country. It is not a move from a foreign country to the United States or its possessions.

For a foreign move, the deductible moving expenses described earlier are expanded to include the reasonable expenses of:

• Moving your household goods and personal effects to and from storage, and
• Storing these items for part or all of the time the new job location remains your main job location. The new job location must be outside the United States.

Reporting moving expenses. Figure moving expense deductions on Form 3903. Carry the deduction from Form 3903 to line 26, Form 1040.

More information. For more information, get Publication 521 and Form 3903 instructions.

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