Publication 521 |
2001 Tax Year |
Who Can Deduct Moving Expenses
You can deduct your allowable moving expenses if your move is
closely related to the start of work. You also must meet the distance
test and the time test. These two tests are discussed later. After you
have read the time and distance test rules, you may want to use
Figure B to help you decide if your move qualifies for
deducting your moving expenses.
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 one 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 allowable 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. A move that does not meet this requirement may
qualify if you can show that:
- You are required to live at that 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 if 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.
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 A.
Figure A
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 also must 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 1
for a summary of these tests.
Time Test for Employees
If you are an employee, you must work full time for at least
39 weeks during the first 12 months 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 and that period is 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 after you arrive
in the general area of your new job location.
For purposes of this test, 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.
If you were both an employee and self-employed, see Table 1
for the requirements.
Table 1. Satisfying the Time Test for
Employees and Self-Employed Persons
IF you are... |
THEN you satisfy the time
test by meeting... |
An employee |
The 39-week test for
employees. |
Self-employed and an employee but unable to
satisfy the 39-week test for employees |
The 78-week test for self-employed
persons. |
Both self-employed and an employee at the same
time |
The 78-week test for a
self-employed person or the 39-week test for an employee
based on your principal place of work. |
Self-employed |
The 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.
Example.
You are a self-employed dentist and maintain office hours 4 days a
week. You are considered to perform services full time if maintaining
office hours 4 days a week is not unusual for other self-employed
dentists in the area.
Temporary absence from work.
You are considered to be self-employed on a full-time basis during
any week you are temporarily absent from work because of illness,
strikes, natural disasters, or similar causes.
Seasonal trade or business.
If your trade or business is seasonal, the off-season weeks when no
work is required or available may be counted as weeks during which you
worked full time. The off-season must be less than 6 months and you
must work full time before and after the off-season.
Example.
You own and operate a motel at a beach resort. The motel is closed
for 5 months during the off-season. You work full-time as the operator
of the motel before and after the off-season. You are considered
self-employed on a full-time basis during the weeks of the off-season.
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 combine the weeks your spouse worked with
the weeks you worked to satisfy that test.
Time test not yet met.
You can deduct your moving expenses on your 2001 tax return even if
you have not yet met the time test by the date your 2001 return is
due. You can do this if you expect to meet the 39-week test in 2002 or
the 78-week test in 2002 or 2003. If you deduct moving expenses but do
not meet the time test in 2002 or 2003, 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 2001 return.
Use Form 1040X, Amended U.S. Individual Income Tax Return,
to amend your return.
If you do not deduct your moving expenses on your 2001 return, and
you later meet the time test, you can file an amended return for 2001
to take the deduction.
Example.
You arrive in the general area of your new job location on
September 15, 2001. You deduct your moving expenses on your 2001
return, the year of the move, even though you have not yet met the
time test by the date your return is due. If you do not meet the
39-week test by September 15, 2002, you must either:
- Report as income on your 2002 return the amount you deducted
as moving expenses on your 2001 return, or
- Amend your 2001 return.
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.
- 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.
Figure B
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 allowable 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 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 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.
Services or reimbursements provided by government.
Do not include in income the value of moving and storage services
provided by the government because of a permanent change of station.
In general, if the total reimbursements or allowances you receive from
the government because of the move are more than your actual moving
expenses, the government should include the excess in your wages on
Form W-2. However, the excess portion of a dislocation
allowance, a temporary lodging allowance, a temporary lodging expense,
or a move-in housing allowance is not included in income.
If your reimbursements or allowances are less than your actual
moving expenses, do not include the reimbursements or allowances in
income. You can deduct the expenses that are more than your
reimbursements. See Deductible Moving Expenses, later.
How to complete Form 3903 for members of the Armed Forces.
Take the following steps.
- Complete lines 1 and 2, using your actual expenses. Do
not include any expenses for moving services provided by the
government. Also do not include any expenses which were reimbursed by
an allowance you do not have to include in your income.
- Enter on line 4 the total reimbursements and allowances you
received from the government for the expenses claimed on lines 1 and
2. Do not include the value of moving services provided by
the government. Also do not include any part of a dislocation
allowance, a temporary lodging allowance, a temporary lodging expense,
or a move-in housing allowance.
- Complete line 5. If line 3 is more than line 4, subtract
line 4 from line 3 and enter the result on line 5 and on Form 1040,
line 26. This is your moving expense deduction. If line 3 is equal to
or less than line 4, enter zero on line 5 (you do not have a moving
expense deduction). Subtract line 3 from line 4 and, if the result is
more than zero, enter it on Form 1040, line 7.
If the military moves you and your spouse and dependents to or
from different locations, treat these moves as a single move.
Do not deduct any expenses for moving services provided by the
government.
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.
United States defined.
For this section of this publication, 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 even 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.
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