J. William Seabrooke CPA P.C.

The exclusive purpose for the information which is provided from this website is to disseminate  information, and not to provide tax advice.

From a global perspective, we are a a very mobile society.  With the exception of those who are serving in our U.S. Armed Forces, up until the mid 1900s moving our families from the general area in which we grew up to another location 100 miles or so away was not a usual occurrence.  During the latter half of that century we began to relocate from one geographic area to another for a myriad of reasons including, employment, better career opportunities, financial gain, adventure, retirement etc.  However, there are expenses and costs which are associated with any move.  In some cases an employer may cover 100% of the costs.  In other situations taxpayers are required to pay some or all of these costs. 

If you meet the specific requirements, most of your costs may be deducted on your tax return. Your total deductible moving expenses are an adjustment (reduction) of your “Total Income” for the determination of your “Adjusted Gross Income” (Line #26 of the 2010 Federal form 1040).  There are two key references for these expenses:  1)  IRS Publication 521, “Moving Expenses”, (http://www.irs.gov/pub/irs-pdf/p521.pdf)  and the instructions for the required Federal form 3903, “Moving Expenses” (http://www.irs.gov/pub/irs-pdf/f3903.pdf)   The former document is only 19 pages in length and the latter is a four-page document.   If your situation or circumstances are not explained, call (800) 829-1040.  You should also review the instructions for your state of residence if the state in which you reside has a state income tax as the rules and requirements may be different.

There are some additional specific facts and information that should be emphasized:

1. If you are buying or selling a home in conjunction with your move, review the provisions and requirements that are contained in IRS Publication 523 (“Selling Your Home” http://www.irs.gov/pub/irs-pdf/p523.pdf) and this recent website article:  http://www.billseabrookecpa.com/blog/?p=1199
2.  Keep accurate, detailed written records for your move including receipts, bills, statements, cancelled checks, credit card statements, mileage logs, employer reimbursement claim forms, etc;
3. Be sure to keep a complete (all pages), signed copy of the Housing and Urban Development form (HUD-1) from both the purchase and sale of your old home, and the the purchase of your new home; 
4. Effective July 1, 2011 the standard mileage rate for moving has increased from $ .195/mile, as stated in the IRS Form 3903 instructions, to $ .235/mile;
5. The costs for sightseeing trips or personal excursions enroute are not deductible;
6. The expenses for your move must be “reasonable”;
7. Your employer will report the total amount of your moving expense reimbursements in Block #12 of your W-2 form using code “P”  Be sure that you reduce the amounts deducted on your tax return by this amount;
8. The costs of meals and house hunting trips are no longer deductible;
9. You can not deduct your moving costs as both a “business expense” and a “moving expense”;
10. Generally, your moving expenses must be work related.  If you are an “employee” you are expected to work full-time for 39 weeks (three quarters) during the 12 months following your move.  If you are “self-employed” the requirement is 78 weeks (six quarters) during the 24-month period after your move.  Review pages two-six of IRS Publication 521;
11. There are also specific tests for the distance which you moved.  Special rules are provided for members of the U.S. Armed Forces, those who are moving to or from the United States, and other specific situations (i.e. retirees and survivors). 

 Ten Tax Tips for Taxpayer Who Are Moving This Summer Summertime is a popular time for people with children to move since school is out. Moving can be expensive, but the IRS offers 10 tax tips on deducting some of those expenses if your move is related to starting a new job or a new job location.

1. Move must be closely related to start of work   Generally, you can consider moving expenses incurred within one year from the date you first reported to a new location, as closely related in time to the start of work.
2. Distance Test   Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous job location was.
3. Time Test   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, or at least 78 weeks during the first 24 months if you are self-employed. If your income tax return is due before you’ve satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test in the following years.
4. Travel   You can deduct lodging expenses for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay to move, but you can only deduct one trip per person.
5. Household goods   You can deduct the cost of packing, crating and transporting your household goods and personal property. You may be able to include the cost of storing and insuring these items while in transit.
6. Utilities   You can deduct the costs of connecting or disconnecting utilities.
7. Nondeductible expenses   You cannot deduct as moving expenses: any part of the purchase price of your new home, car tags, drivers license, costs of buying or selling a home, expenses of entering into or breaking a lease, security deposits and storage charges except those incurred in transit.
8. Form  You can deduct only those expenses that are reasonable for the circumstances of your move. To figure the amount of your moving expense deduction use Form 3903, Moving Expenses.
9. Reimbursed expenses  If your employer reimburses you for the cost of the move, the reimbursement may have to be included on your income tax return.
10. Update your address   When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS.

For more details, review IRS Publication 521, Moving Expenses, and Form 3903, Moving Expenses. IRS publications and forms are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

• Pub. 521, Moving Expenses (PDF)
• Form 3903, Moving Expenses (PDF)
• Form 8822, Change of Address (PDF)