If you moved to a new
town to take a job during 2002, good news. You
probably don’t have to pay all of the costs. If your
employer didn’t pick up the tab, Uncle Sam might
take care of some of the partial costs.
Which moving expenses are deductible? The moving
expense deduction has changed a lot over the years.
For 2002, it’s simple.
General
deductions for moving your family and possessions
are:
Required lodging (but not meals) en route to
your new home.
Cost of moving household goods and personal
effects.
Temporary storage of your household goods (up
to 30 days).
Qualified moving expenses are treated as an
adjustment to income. This means that you can deduct
them whether or not you itemize deductions. You’ll
need file Form 1040 (the long form) and attach Form
3903.
Of course, not all moves are deductible. In order to
deduct your moving expenses, you have to meet two
tests:
Time
You must begin working as a full-time employee
within 13 weeks of your move, and you must work at
least 39 weeks during the 12 months after your
move. And it doesn’t matter whether you were
transferred by your employer or you took a brand
new job. Your move doesn’t even have to be
“work-related,” as long as you have a full-time
job in the new location.
Distance
To meet this test, your new job has to be at least
50 miles further from your old home than your old
job was. If you didn’t have a job before the move,
your new job has to be at least 50 miles from your
old home.
Two more
details:
Your move has to make your commute shorter than it
was prior to your move. In other words, the IRS
won’t allow you to deduct your move if you move
further away. Finally, your move must be closely
related to the start of your new job. Generally,
this means you have to incur and pay your moving
expenses within a year of starting the job, unless
circumstances prevented you from moving earlier.
Remember, for most taxpayers, expenses are
deductible in the year they were paid, regardless of
when they were incurred.
What could be better than a tax deduction? How about
your employer paying for your move? Many employers
will pay some or all of the cost of the move when
they transfer an employee to a new area. These
payments of qualified moving expenses are excluded
from your taxable income and should be noted with a
code P in box 12 of your W-2. But be aware of this:
Some employers pay for things that would not be
deductible — possibly because they’re just being
nice, but probably because they used to be
deductible. If your employer pays for things like
the expense of selling your old home, buying a new
home, breaking a lease, acquiring a new lease,
temporary housing or meals eaten during your move,
these amounts must be included in your taxable
income. The employer will probably add them to Box 1
of your W-2.
But even with the additional tax, it’s a pretty good
deal.
*If you’re self-employed in the new location, you
must also work at least 78 weeks during the first 24
months.
