You may have changed jobs during the year or your employer may have transferred you to a new location. If your job change required you to move to a new location and you meet the following qualifications, you can deduct your job-related moving expenses.

Moving Deduction Requirements
To qualify for a job-related moving expense deduction, your move must be closely related, both in time and in place, to the start of work at a new job location. You must also meet the specific requirements of the Distance Test and the Time Test.

Closely Related in Time
Generally, moving expenses incurred within one year from the date you first reported to work at the new location are considered closely related in time to the start of work. You do not need to have a job arranged before moving to a new location, as long as you actually do go to work within the year.

If you do not move within one year of the date you begin work, you ordinarily cannot deduct expenses unless you can show that circumstances existed that prevented your move within that time. For example, you delayed your move for 18 months to allow your child to complete high school.

Closely Related in Place
You can generally consider your move closely related in place to 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 your new home as a condition of your employment or that you will spend less time or money commuting from your new home to your new job location.

Distance Test
In general, your move will meet this 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 former workplace was three miles from your former home, your new workplace must be at least 53 miles from that home.

Time Test
If you are an employee or a self-employed taxpayer, 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. Additionally, if you are a self-employed taxpayer, you must work 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. Full-time employment depends on what is usual for that type of work in the area.

To meet this test, you do not have to work for the same employer for all 39 weeks or be self-employed in the same trade or business for the 78 weeks. If you are an employee, the 39 weeks you work do not have to be sequential. You must work full time within the same general commuting area for all 39 weeks (all 78 weeks if self-employed).

You do not have to meet the Time Test if:

• You are in the Armed Forces and you moved because of a permanent change of station.
• You moved to the United States because you retired.
• You are the survivor of a person whose main job location at the time of death was outside the United States.
• Your job at the new location ends because of death or disability.
• Your job at the new location ends because 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.

Deductible Moving Expenses
You can deduct the reasonable expenses you pay in connection with moving your household goods and personal effects (including in-transit or foreign-move storage expenses) and traveling (including lodging but not meals) to your new home.

Household Goods And Personal Effects
You can deduct the following expenses for moving household goods and personal effects:

• The cost of packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home.
• 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.
• Any costs of connecting or disconnecting utilities required because you are moving your household goods, appliances, or personal effects.
• The cost of shipping your car and your household pets to your new home.
• The cost of moving your household goods and personal effects from a place other than your former home; your deduction is limited to the amount it would have cost to move them from your former home.

For example, John Doe is a resident of North Carolina and has been working there for the last four years. Because of the small size of his apartment, he stored some of his furniture in Georgia with his parents. John accepted a new job and is moving to Washington, DC. It cost him $300 to move his furniture from North Carolina to Washington and $1,100 to move his furniture from Georgia to Washington. If John shipped his furniture in Georgia from North Carolina (his former home), it would have cost $600. He can deduct only $600 of the $1,100 he paid. The amount he can deduct for moving his furniture is $900 ($300 + $600).

Note: You cannot deduct the cost of moving furniture you may buy on the way to your new home.

Traveling
If you use your car when moving, you can deduct your actual expenses (such as gas and oil) as long as you keep accurate records of each expense. You cannot deduct any part of general repairs, general maintenance, insurance, or depreciation for your car. You may decide to take the standard mileage rate of 12 cents per mile instead of claiming your actual expenses. Whether you use actual expenses or the standard mileage rate to calculate your expenses, you can still deduct parking fees and tolls you pay when moving.

You can deduct the cost of transportation and lodging for you and members of your household while traveling from your former home to your new home using the most direct route. This includes expenses for the day you arrive at your new home. You can include any lodging expenses you had in the area of your former home within one day after you could no longer live in your former home because your furniture had been moved.

You can deduct expenses for only one trip to your new home. You do not need to travel with or at the same time as other members of your household. Each person is allowed one trip.

• Any part of the purchase price of your new home.
• Car tags.
• Driver's license.
• Expenses of buying or selling a home.
• Expenses of getting or breaking a lease.
• Home improvements to help sell your home.
• Loss on the sale of your home.
• Losses from disposing of memberships in clubs.
• Meal expenses.
• Mortgage penalties.
• Pre-move house hunting expenses.
• Real estate taxes.
• Refitting of carpets and draperies.
• Security deposits (including any given up due to the move).
• Storage charges except those incurred in transit and for foreign moves.
• Temporary living expenses .

Reporting Job-Related Moving Expenses
Actual moving expenses are recorded on Form 3903, Moving Expenses. If you are allowed a moving expense deduction, enter the amount from Form 3903, Line 5 on Form 1040, U.S. Individual Income Tax Return, Line 27.

You may be able to deduct your job-related moving expenses for the year, even if you have not yet met the Time Test but expect to do so within the following year.

Completing Form 3903
If the moving requirements are met, complete Form 3903, Lines 1-3 using your actual expenses. If you used your own car, you may elect to calculate expenses based on a mileage rate of 12 cents per mile, instead of on actual amounts for gas and oil.

Enter the total amount of your moving expense reimbursement that was excluded from your wages on Form 3903, Line 4. Your employer reports the excluded amount on Form W-2, Wage and Tax Statement, Box 12, using code P to identify the amount.

For example, Bob Smith is married and has two children. He owned his home in Detroit where he worked. On February 8, his employer told him that he would be transferred to San Diego as of April 10 that year. His wife, Sandy, flew to San Diego on March 1 to look for a new home. She put a down payment of $25,000 on a house being built and came back to Detroit on March 4. The Smiths sold their Detroit home for $1,500 less than they paid for it. They contracted to have their personal effects moved to San Diego on April 3. The family drove to San Diego where they found that their new home was not finished. They stayed in a nearby motel until the house was ready on May 1. On April 10, Bob went to work in the San Diego plant where he still works.

Bob's records for the move are as follows:

Expense Items

Bob was reimbursed $10,643 from his employer under an accountable plan as follows:

Bob's employer gave him a breakdown of the reimbursement amount:

The reimbursement of deductible expenses, $7,244 ($6,800 + $444) for moving household goods and travel to San Diego, was included on Form W-2, Box 12. His employer identified this amount with code P.

The reimbursement balance of $3,399 ($10,643 - $7,244) was a reimbursement of nondeductible expenses, which the employer reported on Form W-2, Box 1 with Bob's other wages. Bob must include this amount on Form 1040, Line 7. The employer withholds taxes from the $3,399.
Bob calculates his deduction for allowable moving expenses on Form 3903.

Note: Bob's records for Item 6 show that he spent a total of $764 for moving his family to San Diego by car. Because meals are not an allowable expense on Form 3903, he could only claim $444 ($264 for mileage and $180 for lodging).

In addition to the expense for meals for his family when moving to San Diego by car, Bob was not allowed to claim the following expense items on Form 3903:

• Item 1 - Pre-move house hunting expenses.
• Item 2 - Down-payment on the San Diego home.
• Item 3 - The real estate commission paid on the sale of the Detroit home.
• Item 4 - The loss on the sale of the Detroit home (cannot be deducted even though Bob's employer reimbursed him for it).
• Item 7- - Temporary Living Expenses

Report your moving expense deduction as other income on Form 1040 for the year you cannot meet the test

Use Form 1040X, Amended U.S. Individual Income Tax Return, to amend your 2004 return

If you do not deduct your moving expenses on your 2004 return and you later meet the Time Test, you can file an amended 2004 return to take the deduction.

Please remember that your Emerald Tax Service tax preparer is ready to help answer any questions you may have regarding job-related moving expenses. You should bring documentation of all of your job-related moving expenses to your interview with your Emerald Tax Service tax preparer.