Friday, February 11, 2011

My employer paid moving expenses. Can I deduct them?

If you moved to a new home because you changed job locations or started a new job, you can deduct your moving expenses on Form 3903.  There are three requirements:
  • Relationship test - must move within one year from the date you first report to your new location
  • Distance test - move must decrease your commute by 50 miles or more. In other words, your new job has to more than 50 miles farther away from your hold home than the distance from your old home to the old work location.
  • Time test - must work full time in the new location for at least 39 weeks during the 12 months after the move. If you're self-employed you must also work in the new job for 78 weeks during the 24 months following the move. (There are exceptions for disability, layoff, transfers, and other situations.)
If moving expenses were not reimbursed by your employer, you can deduct all allowable expenses. If moving expenses were reimbursed by the employer under a(an):
  • non accountable plan, the reimbursement is included in your W-2 box 1.
  • accountable plan, the reimbursement is excluded from the W-2 box 1. This amount excluded from income and is reported in box 12 of the W-2 with a code P. This amount is reported on line 4 of the Form 3903.
The easiest solution is to complete Form 3903 and if there is a deduction available it will carry over to Form 1040 line 26.

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