ON THE MOVE? WATCH FOR DEDUCTIONS!

If your relocation is job-related — and you meet a couple of requirements — you can get some tax benefits from your qualified moving expenses.

In today’s mobile society, few people spend their lives in a single location, let alone a single city. People are constantly moving — many for better jobs, all in hope of a better lifestyle.

Moving expenses are tax deductible if you meet certain qualifications. And the best part is you don’t have to itemize to claim them. Moving expenses are considered “above-the-line” deductions. That means that you can claim them in addition to your standard deduction, or your itemized deductions.

You can deduct moving expenses if you moved to a different home because of a change in job locations or if you started a new job. You can take the deduction whether you are self-employed or an employee. However, you must pass two tests: the distance test and the time test.

Distance Test

Your new workplace must be at least 50 miles from your old. For example, if your old workplace was three miles from your old home, your new workplace must be at least 53 miles from that home. If you did not have an old workplace, your new workplace must be at least 50 miles from your old home.

Your principal job location is usually the place where you do most of your work and spend most of your time. A new principal job location is a new place where you will work on a permanent or indefinite basis rather than on a temporary basis.

If you get work under a union hall system (such as construction and the building trades), use the distance between your home and the union hall.

Time Test

To deduct your “moving expenses” you must also meet one of the following two time tests:

If you are an employee, you must work full time at least 39 weeks during the 12-month period following your arrival in the general area of your new job location. You don’t have to work for one employer for the 39 weeks, nor do you have to work 39 weeks in a row. But you must work full time within the same general commuting area.

Whether you are employed full time depends on what’s typical for your type of work. For example, a schoolteacher on a 12-month contract who teaches on a full-time basis for more than six months is considered a full-time employee for the entire 12 months. Alternatively, if your work is seasonal, you are considered working full time during the off-season weeks if your contract or agreement covers an off-season of fewer than six months.

You are considered to be working during any week you are temporarily absent from work because of illness, strikes, natural disasters or the like. You are also considered to be a full-time employee during any week you are absent from work for leave or for vacation that is provided in your work contract or agreement.

If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and a total of 78 weeks during the 24 months after your arrival in the area of your new job location. Whether you perform services during a given week depends on the custom of your type of work in your area.

The time test doesn’t have to be met if any of the following apply:

•	Your job ends because of disability.
•	You are transferred for your employer’s benefit.
•	You are laid off or discharged for a reason other than willful misconduct.
•	You died and the expenses are being claimed after your death.

Neither the distance nor time tests have to be met if you are a member of the armed forces and your move is due to a permanent change of station.

What’s Deductible?

You may deduct the following expenses incurred in moving your family and dependent household members:

The actual costs to pack, crate and move your household goods and personal effects are deductible. In one case, a marine officer’s moving expense deduction included the cost of moving his boat. You may also include the cost to store and insure household goods and personal effects within any period of 30 days in a row after the items were moved from your old home and before they were delivered to your new home.

The actual costs of travel from your old home to your new home. These include transportation and lodging on the way and costs for the day you arrive. You may only include expenses for one trip per person. Expenses for personal employees such as a maid, nanny or nurse are not deductible by you — because they are deductible by them.

If you use your own car, you may deduct either the actual out-of-pocket expenses for gas and oil, or a standard mileage rate published by IRS each year (refer to Publication 521, in the section titled Deductible Moving Expenses). The standard mileage rate for 2003 was $0.12 (12¢) per mile; for 2004 it is $0.14 (14¢) per mile. Parking fees and tolls are added to either method.

You can’t deduct items such as pre-move house-hunting trips, temporary living expenses and the costs associated with selling your old home. Current law no longer allows these expenses as deductible moving expenses on Form 3903, Moving Expenses. However, since these expenses are employment related, they are still deductible on Form 2106, Employee Business Expenses. If you are self-employed, deduct these expenses on Schedule C, Profit or Loss From Business.

If you are using Form 2106 or Schedule C, consider deducting your automobile expenses on these forms instead of on Form 3903. There are two reasons:

The standard mileage rate is much higher. In 2003 it was $0.36 (36¢) per mile; for 2004 it is $0.375 (37½¢) per mile.

If you use actual costs, you may deduct the business portion of fuel, oil, interest, insurance, repairs, maintenance, tires, parts, taxes and registration fees, supplies, lease expense, and depreciation — not merely the gas and oil you used on the moving trip(s).

The point is, try working out your moving expenses using a combination of forms until you get the best possible tax break.

If you will file Schedule C, consider deducting all of your moving expenses there instead of on Form 3903. The expenses are still deductible as a business expense, and you reduce your Self-Employment Tax (Schedule SE), to boot!

You deduct all of your qualified moving expenses on Form 3903. Any reimbursements from your employer are then subtracted to give you your net allowable deduction.

Depending on state and local taxes, as much as half of your moving costs may be paid for by Uncle Sam.