Moving Expenses If you moved to a new home in 1999 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 withstarting work at a new job location. Requirements You may be able to deduct moving expenses if you meet the followingrequirements. Distance The distance from your new job location to your former home must beat least 50 miles more than the distance from your old joblocation 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 first12 months after you move. If you are self-employed, you mustwork full time for at least 39 weeks during the first 12 monthsAND for at least 78 weeks during the first 24 monthsafter you move. Retirees.You can deduct your allowable moving expenses if you move to theUnited States when you permanently retire if your principal place ofwork and former home were outside the United States and itspossessions. You do not have to meet the time test. The otherrequirements must be met. Survivors.You can deduct moving expenses for a move to a home in the UnitedStates if you are the spouse or dependent of a person whose principalplace of work at the time of death was outside the United States orits possessions. The move must begin within 6 months after thedecedent's death and must be from the decedent's former home outsidethe United States in which you lived with the decedent at the time ofdeath. You are not required to meet the time test. The otherrequirements must be met. Closely Related to the Start of Work Your move must be closely related, both in time and in place, tothe start of work at your new job location. Closely related in time.In general, moving expenses incurred within one year from the dateyou first reported to work at the new location are considered closelyrelated in time to the start of work. If you do not move within one year, you ordinarily cannot deductthe expenses unless you can show that circumstances existed thatprevented the move within that time. Example.Your family moved more than a year after you started work at a newlocation. Their move was delayed because you allowed your child tocomplete high school. You can deduct your allowable moving expenses. Closely related in place.Tartu hotelesA move is generally considered closely related in place to thestart of work if the distance from your new home to the new joblocation is not more than the distance from your former home to thenew job location. A move that does not meet this requirement mayqualify if you can show that: A condition of employment requires you to live at your newhome, or You will spend less time or money commuting from your newhome to your new job. Deductible Expenses You can only deduct certain expenses. Reasonable expenses.You can only deduct expenses that are reasonable for thecircumstances of your move. The cost of traveling from your formerhome to your new one should be by the shortest, most direct routeavailable by conventional transportation. Reimbursements.If you are reimbursed by your employer for allowable movingexpenses, these reimbursements may have been excluded from yourincome. You cannot deduct moving expenses for which you werereimbursed by your employer unless the reimbursement was included inyour income. Deductible moving expenses.Some of the moving expenses that you may be able to deduct includethe reasonable costs of: Moving household goods and personal effects (includingpacking, crating, in-transit storage, and insurance) of both you andmembers of your household. For foreign moves,costs of moving household goods and personal effects includereasonable expenses of moving the items to and from storage andstoring them while your new place of work abroad is your principalplace of work. Transportation and lodging for yourself and members of yourhousehold 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 formerand new home as his or her home. It does not include a tenant oremployee unless that person is your dependent. Foreign moves.A foreign move is a move in connection with the start of work at anew job location outside the United States and its possessions. Aforeign move does not include a move back to the United States or itspossessions. Allocation of Moving Expenses Your deductible moving expenses must be incurred in connection withthe start of your work at a new job location. When your new place ofwork is in a foreign country, your moving expenses are directlyconnected with the income earned in that foreign country. If all orpart of the income that you earn at the new location is excluded underthe foreign earned income exclusion or the housing exclusion, the partof your moving expense that is allocable to the excluded income isnot 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 forservices performed in the foreign country, and You choose to exclude your foreign earned income, you cannot deduct the part of the moving expense that isrelated to the excluded income. The moving expense is connected with earning the income (includingreimbursements, as discussed in chapter 4under Reimbursement ofmoving expenses) either entirely in the year of the move or in 2years. It is connected with earning the income entirely in the year ofthe move if you qualify under the bona fide residence test or physicalpresence test for at least 120 days during that tax year. If you do not qualify under either the bona fide residence test orthe physical presence test for at least 120 days during the year ofthe move, the expense is connected with earning the income in 2 years.The moving expense is connected with the year of the move and thefollowing year if the move is from the United States to a foreigncountry, or the year of the move and the preceding year ifthe move is from a foreign country to the United States. To figure the amount of your moving expense that is allocable toyour excluded foreign earned income (and not deductible), you mustmultiply your total moving expense deduction by a fraction. Thenumerator (top number) of the fraction is your total excluded foreignearned income and housing amounts for both years and the denominator(bottom number) of the fraction is the total foreign earned income forboth years. Example.You are transferred by your employer as of November 1, 1998, to aforeign country. Your tax home is in the foreign country, and youqualify as a bona fide resident for the entire tax year 1999. In 1998you paid $6,000 for allowable moving expenses for your move from theUnited States to the foreign country. You were fully reimbursed (undera nonaccountable plan) for these expenses in the same year. Thereimbursement is included in your income. Your only other incomeconsists of $14,000 wages earned in 1998 after the date of your move,and $80,000 wages earned in the foreign country for the entire year1999. You exclude the maximum amount under the foreign earned incomeexclusion and have no housing exclusion. Because you did not meet the bona fide residence test for at least120 days during 1998, the year of the move, the moving expenses arefor services you performed in both 1998 and the following year, 1999.Your total foreign earned income for both years is $100,000,consisting of $14,000 wages for 1998, $80,000 wages for 1999, and$6,000 moving expense reimbursement for both years. five star hotel in SienaOf this total, $86,033 is excluded, consisting of the $74,000full-year exclusion for 1999 and a $12,033 part-year exclusion for1998 ($72,000 times the fraction of 61 qualifying bona fide residencedays over 365 total days in the year). To find the part of your movingexpenses that is not deductible, multiply your $6,000 total expensesby the fraction $86,033 over $100,000. The result, $5,162, is yournondeductible amount. Caution: You must report the full amount of the moving expense reimbursementin the year in which you received the reimbursement. In the precedingexample, this year was 1999. You attribute the reimbursement to both1998 and 1999 only to figure the amount of foreign earnedincome eligible for exclusion for each year. Move between foreign countries.If you move between foreign countries and you qualified under thebona fide residence test or the physical presence test for at least120 days during the year of the move, your moving expense is allocableto 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 deductiblemoving expenses are directly connected with the income earned in theUnited States. If you treat a reimbursement from your employer asforeign earned income (see the discussion in chapter 4),you mustallocate deductible moving expenses to foreign earned income. Storage expenses.These expenses are attributable to services you perform during theyear in which the storage expenses are incurred. The amount allocableto excluded income is not deductible. Recapture of Moving Expense Deduction If your moving expense deduction is attributable to your foreignearnings in 2 years (the year of the move and the following year), youshould request an extension of time to file your return for the yearof the move until after the end of the following year. You should thenhave all the information needed to properly figure the moving expensededuction. See Extensions under When To File and Pay,in chapter 1. If you do not request an extension, you should figure the part ofthe entire moving expense deduction that is disallowed. You do this bymultiplying the moving expense by a fraction, the numerator (topnumber) of which is your excluded foreign earned income for the yearof the move, and the denominator (bottom number) of which is yourtotal foreign earned income for the year of the move. Once you knowyour foreign earnings and exclusion for the following year, you musteither: Adjust the moving expense deduction by filing an amendedreturn for the year of the move, or Recapture any additional unallowable amount as income onyour return for the following year. If, after you make the final computation, you have anadditional amount of allowable moving expense deduction, you can claimthis only on an amended return for the year of the move. You cannotclaim it on the return for the second year. Forms to file.Report your moving expenses on Form 3903.Report your moving expense deduction online 26 of Form 1040. If you must reduce your moving expenses by theamount allocable to excluded income as explained later under HowTo Report Deductions, attach a statement to your return showinghow you figured this amount. For more information about figuring moving expenses, seePublication 521.