(1) Generally, moving expenses must be incurred within a time frame which is closely related to the start of the new job. Expenses within ONE YEAR after starting work at the new location are generally acceptable. Rev Rul 78-200 allowed thirty months between job-start and family move because a child in the family was finishing a stage of his education.

(2) To qualify, the move should be to the VICINITY OF THE NEW JOB LOCATION. A taxpayer usually cannot meet this test if the distance to the new job from the new residence is farther than to the new job from the old residence. This test will not apply if the move reduces commuting time or expense, or if a taxpayer is required to move to a new home by an employer.

(3) The distance requirement: The distance to the new job from the old home must be at least 50 miles farther than to the old job from the old home. That is, if the taxpayer did not move, the new commute would be 50 miles longer than the old commute. If there was no previous job, measure the distance from the previous residence to the new job. Note: The distance requirement does not apply to military moves.

(4) The time test: To meet this test (does not apply to military moves),

• An EMPLOYEE must work in the area of the new job FULL-TIME for 39 weeks (9 months) out of the first 52 weeks.

• A SELF-EMPLOYED person must work FULL TIME for 39 weeks in the first year after the move AND 78 Weeks in the first two years.

Only one spouse must qualify, but the time test cannot be met by adding the weeks worked by one spouse to the weeks worked by the other spouse. It is not necessary to work for the same employer the whole time.

Exceptions to the Time Test: The moving expense deduction is allowed if the taxpayer could “reasonably have expected” to fulfill the time requirements but was prevented by:

• Death, Disability

• Job lay-off, or

• Transfer by his/her employer.

• Allowances are also made for work missed:

   • Because of its SEASONAL NATURE, if the off-season is less than six months and is provided for in the employment agreement (for example, a teacher)

    • For INVOLUNTARY ABSENCES (illness, strike, etc.)

    • For TEMPORARY ABSENCES such as vacation.

If the time test requirement has not been completed when the return is due, the taxpayer can either go ahead and claim the deduction (and amend if the time test ends up not being met) OR can wait and amend the return after the requirement is met.

(5) Armed forces: There is no distance or time requirement on a permanent change of station (PCS). If a spouse and dependents of the taxpayer move to or from a different location than the military person, the two moves are treated as one.

(6) Foreign Moves

U.S. to a Foreign Country - The expenses of moving from the U.S. or its possessions to a new principal place of work outside the U.S. or its possessions include the reasonable expenses (no dollar ceiling) listed below, but the expenses may be limited if the employee also qualifies for the foreign earned income or foreign housing exclusions.

Moving expenses aren't deductible to the extent allocable to exempt foreign-source earned income. In the absence of evidence to the contrary, reimbursement of expenses to move to a foreign country is attributed to future services to be performed at the new place of work. (Reg § 1.911-3(e)(5)(i))

The reimbursement for a foreign move is considered earned solely in the year of the move if the taxpayer qualifies for the earned income exclusion for at least 120 days of the year of the move. If not, the reimbursement must be allocated between the first and second years. See IRS Pub 54 for details related to moving to a foreign country.

Foreign Country to U.S - If an individual otherwise meets the moving requirements, a move from a foreign country to the U.S. is allowed.Moving expense reimbursement included in income is generally considered to be U.S. source income and the general moving rules will apply. However, if the employer by agreement or company policy provides reimbursement regardless of continued employment with the employer, the reimbursement is considered compensation for past services performed in the foreign country.

(7) Strategy - Moving expenses can be deducted in the year they were paid or incurred OR if reimbursed, in the year in which reimbursement is received (as long as the expense is paid before the extended due date of the return).

This provides an opportunity to pick the best year for deducting the expenses. (Code Sec. 217(d)(2); Reg § 1.217-2(a)(2)) The taxpayer can also wait until the applicable condition is satisfied; then file an amended return claiming the deduction for the tax year the moving expense was paid or incurred. (Reg § 1.217-2(d))