Moving expenses are reported on IRS form 3903.
The taxpayer has to meet certain tests in order to qualify for the moving expenses. There are 2 tests that the taxpayer has to meet, these are the Distance Test and the Time Test.
1. Distance Test
According to IRS regulations, your principal workplace must be at least 50 miles farther from your old home than your old worokplace was. This means, in essence, that if your old workplace was 5 miles from your old home, your new workplace must be at least 55 miles from that home. If you did not have an old workplace, your new workplace must be least 50 miles from your old home.
Use the following worksheet to calculate whether you may qualify.
1. No. of miles from old home to new workplace ___miles
2. No. of miles from old home to old workplace ____ miles
Subtract line 1 from line 2. If the answer is more than 50 miles you qualify for this test. (1)- (2) >50 miles.
The IRS guidelines state that if you are an employee, you must work full time in the general area of your new workplace for at least 39 weeks during the 12 months right after the move. If you are self-employed, you must work full time in the general area of your new workplace for at least 39 weeks during the the first 12 months and a total of 78 weeks during the 24 monthsright after the move.
So let us assume the 2 tests are met, than the taxpayer would qualify for claiming moving expenses on Form 3903.
What are the items that can be claimed? We are assuming that your employer did not reimburse you for these moving expenses.
1. Transportation and storage of household and personal effects
Here you can deduct the storage costs, u-haul rentals, transportation of your vehicle by professional movers and the moving company costs that include the packing ,crating and material costs.
2. Travel and logdging in connection with the move.
The travel costs include airfare, hotels in connection with the move, temporary housing costs, auto expenses such as fuel and oil costs, if you are driving the vehicle.
(But do not include Sightseeing costs, this is specifically prohibited by IRS).
Note for those taxpayers that receive employer reimbursement, these moving costs are are reduced by these amounts.
The total moving costs are then claimed as an adjustment on the tax return on line 26 of 1040 page 1. These expenses are not subject to any limitations, hence taxpayer should keep excellant records and receipts for these expenses.
Last edited by TaxGuru : 02-19-2007 at 01:22 PM.