A Tax Tip Article from The Tax Institute at H&R Block

If you move in 2009 because of your job, you may be able to deduct some of the cost of moving to the new location when you file taxes next year. Here’s what you need to know:

Location, location, location .. and time too
The distance between your old home and new job location must be at least 50 miles greater than the distance between your old home and old job location.  For example, if you previously lived 10 miles away from your old job, your new job location would have to be 60 miles away from your old home.

You must also meet a time test. You must work as a full-time employee at the new location at least 39 weeks during the 12-month period following your arrival. In other words, if you arrive at your new location October 1, 2009, you would have to work full-time at least 39 weeks from October 1 through September 30, 2010. However, you do not need to wait until the time test is met to deduct moving expenses.

If you are self-employed, the time test is a bit more complicated. In addition to the 39 week/12 month test, you must also work at least 78 weeks during the first 24 months after your arrival.

Tax deductible moving expenses include:

• The cost of moving all of your household goods and personal effects to the new location
• Travel expenses for one trip for yourself and each household member to the new location. Travel expenses include transportation and lodging but not meals. If you drive, the mileage rate for moving in 2009 is 24 cents per mile. Only one trip is deductible for each of you, but you do not have to travel together or at the same time.
• The cost of storing your household goods within any consecutive 30 day period after they are moved from your old home and before they are delivered to your new home.
• And don’t forget Toto! Yes, you can deduct the cost of shipping your household pets to your new home.

You may not deduct:

• The cost of selling your old home, buying your new one, or house-hunting expenses
• Meals
• Temporary living expenses

What about employer-paid or reimbursed moving expenses?
You may only deduct qualified moving expenses that have not been paid or reimbursed by your employer as a nontaxable benefit. Employer-paid moving expenses are not taxable if:

• Qualified expenses are paid directly to a third party (such as a moving company)
• You are reimbursed for qualified expenses under an accountable plan (that is, you submit receipts or other substantiation to your employer and return any excess reimbursement)

Excess reimbursements that are not returned, moving expenses paid under a non-accountable plan, and payment or reimbursement for non-qualified expenses (such as meals) are all taxable income to you. Keep in mind that the same criteria that apply to deductible moving expenses apply to nontaxable employer benefits.

Qualified expenses in excess of what is paid or reimbursed by your employer are deductible.

‘Above the line’ tax deduction
Many people are not aware that qualified moving expenses are tax  deductible “above the line,” meaning that you may claim the deduction without itemizing. If you relocate in 2009 and meet all of the rules, be sure to claim this valuable deduction when you file starting in January 2010. Use Form 3903, Moving Expenses, for this deduction.

This Tax Tip Article is brought to you by The Tax Institute at H&R Block.

To view other helpful tax tip information, visit the H&R Block Community, Digits, at www.digits.hrblock.com

As always...everyone's tax situation is different, so be sure to consult a tax professional or financial advisor before making important financial decisions.

This Tax Tip Article is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice, nor is it intended to be used to avoid IRS penalties.