Moving Expense Page by Don Fitch CPA (877)CPA-Help

Moving Expense IRS Form 3903
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Moving Expenses

OVERVIEW

Taxpayers often find it necessary to change their residences in connection
with their current or new employment. To ease the burden of
relocation, Code Section 217 allows a taxpayer to deduct certain moving
expenses incurred in connection with the commencement of work in a new
location. Work may be either as an employee or as a self-employed
individual. For moving expenses to be deductible, however, the taxpayer
must work in his new location for a minimum period of time and meet other
requirements.

The Revenue Reconciliation Act of 1993 (RRA 1993), Pub. L. 103-66, removed
the deduction for moving expenses from the list of deductions exempt from
the 2 percent floor limitation provided by Code Section 67(a). Moving
expenses allowable under Code Section 217 are now one of the items
deducted "above the line" from gross income to arrive at the adjusted
gross income figure. The Act also eliminated the deduction for house
hunting and temporary living expenses as well as for the costs of
disposing of and acquiring residences for expenses incurred after 1993.
The general rules for determining the allowable moving expense deductions
are modified as well for members of the armed forces, for foreign moves,
and for retirees or survivors of decedents who were working abroad.

COMPLIANCE TIP: Report moving expenses on Form 3903, Moving Expenses,
and deduct the reported expenses on Form 1040. A taxpayer claiming a
deduction for moving expenses cannot file Form 1040A or Form 1040EZ.

PRACTICE TIP: A taxpayer who moves should notify the IRS. Form 8822,
Change of Address, is used for this purpose; it should be filed with
the IRS Service Center for the old address. The addresses for the
Service Centers are on the back of Form 8822, or see Quick
Reference Table, IRS Domestic Addresses.

There are no special substantiation provisions that must be met in order
to deduct moving expenses. However, where a taxpayer cannot substantiate
her moving expenses, those expenses will be disallowed. In situations
where the taxpayer establishes that moving expenses were incurred but
cannot substantiate the exact amount of the expense, the amount of the
deduction allowed is determined pursuant to Cohan v. Commissioner, 39
F.2d 540 (2d Cir. 1930). A taxpayer is also entitled to deduct the
moving expense standard mileage rate for use of his own car whether or
not the taxpayer can substantiate the operating expenses of the car.
McCabe v. Commissioner, T.C. Memo. 1985-202.