Publication 521 – Introductory Material

What’s New

Standard mileage rate. For 2017, the standard mileage rate for using your vehicle to move to a new home is 17 cents a mile. See Travel by car under Deductible Moving Expenses.

Reminders

Future developments. For the latest information about developments related to Pub. 521, such as legislation enacted after it was published, go to IRS.gov/Pub521.

Change of address. If you change your mailing address, be sure to notify the IRS using Form 8822, Change of Address. Mail it to the Internal Revenue Service Center for your old address. Addresses for the service centers are on the back of the form. If you change your business address or the identity of your responsible party, use Form 8822-B, Change of Address or Responsible Party — Business.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Introduction

This publication explains the deduction of certain moving expenses to a new home because you started or changed job locations. It includes the following topics.

• Who can deduct moving expenses.
• What moving expenses are deductible.
• What moving expenses aren’t deductible.
• How a reimbursement affects your moving expense deduction.
• How and when to report moving expenses.
• Special rules for members of the Armed Forces.

Form 3903, Moving Expenses, is used to claim the moving expense deduction. An example of how to report your moving expenses is shown near the end of the publication.

You may be able to deduct moving expenses whether you are self-employed or an employee. Your expenses generally must be related to starting work at your new job location. However, certain retirees and survivors may qualify to claim the deduction even though they aren’t starting work at a new job location. See Who Can Deduct Moving Expenses.

Recordkeeping.

It is important to maintain an accurate record of expenses you paid to move. You should save items such as receipts, bills, canceled checks, credit card statements, and mileage logs. Also, you should save your Form W-2 and statements of reimbursement from your employer.

Comments and suggestions.

 

We welcome your comments about this publication and your suggestions for future editions.

You can send us comments from IRS.gov/FormComments. Or you can write to:

Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

 

Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.

Ordering forms and publications.

Visit IRS.gov/FormsPubs to download forms and publications. Otherwise, you can go to IRS.gov/OrderForms to order current and prior-year forms and instructions. Your order should arrive within 10 business days.

Tax questions.

If you have a tax question not answered by this publication, check IRS.gov and How To Get Tax Help at the end of this publication.

Useful Items – You may want to see:

Publication

• 3Armed Forces’ Tax Guide

Forms (and Instructions)

• 1040S. Individual Income Tax Return
• 1040XAmended U.S. Individual Income Tax Return
• 3903Moving Expenses
• 8822Change of Address
• 8822-BChange of Address or Responsible Party — Business

See How To Get Tax Help near the end of this publication, for information about getting the publications and the forms listed above.

Publication 521 – Main Content

Who Can Deduct Moving Expenses

You can deduct your moving expenses if you meet all three of the following requirements.

• Your move is closely related to the start of work.
• You meet the distance test.
• You meet the time test.

After you have read these rules, you may want to use Figure B to help you decide if you can deduct your moving expenses.

Retirees, survivors, and Armed Forces members.

Different rules may apply if you are a member of the Armed Forces or a retiree or survivor moving to the United States. These rules are discussed later in this publication.

Move Related to Start of Work

Your move must be closely related, both in time and in place, to the start of work at your new job location.

Closely related in time.

In most cases, you can consider moving expenses incurred within 1 year from the date you first reported to work at the new location as closely related in time to the start of work. It isn’t necessary that you arrange to work before moving to a new location, as long as you actually go to work in that location.

 

Figure A. Illustration of Distance Test

 

Figure A

Please click here for the text description of the image.

 

If you don’t move within 1 year of the date you begin work, you ordinarily can’t deduct the expenses unless you can show that circumstances existed that prevented the move within that time.

Example.

Your family moved more than a year after you started work at a new location. You delayed the move for 18 months to allow your child to complete high school. You can deduct your moving expenses.

Closely related in place.

You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location isn’t more than the distance from your former home to the new job location. If your move doesn’t meet this requirement, you may still be able to deduct moving expenses if you can show that:

• You are required to live at your new home as a condition of your employment, or
• You will spend less time or money commuting from your new home to your new job location.

 

Home defined.

Your home means your main home (residence). It can be a house, apartment, condominium, houseboat, house trailer, or similar dwelling. It doesn’t include other homes owned or kept up by you or members of your family. It also doesn’t include a seasonal home, such as a summer beach cottage. Your former home means your home before you left for your new job location. Your new home means your home within the area of your new job location.

Retirees or survivors.

You may be able to deduct the expenses of moving to the United States or its possessions even though the move isn’t related to the start of work at a new job location. You must have worked outside the United States or be a survivor of someone who did. See Retirees or Survivors Who Move to the United States, later.

Distance Test

Your move will meet the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. For example, if your old main job location was 3 miles from your former home, your new main job location must be at least 53 miles from that former home. You can use Worksheet 1 to see if you meet this test.

Worksheet 1. Distance Test

	Note. Members of the Armed Forces may not have to meet this test. See Members of the Armed Forces.
1.	Enter the number of miles from your old home to your new workplace	1.	miles
2.	Enter the number of miles from your old home to your old workplace	2.	miles
3.	Subtract line 2 from line 1. If zero or less, enter -0-	3.	miles
4.	Is line 3 at least 50 miles? □ Yes. You meet this test. □ No. You don’t meet this test. You can’t deduct your moving expenses.

 

The distance between a job location and your home is the shortest of the more commonly traveled routes between them. The distance test considers only the location of your former home. It doesn’t take into account the location of your new home. See Figure A.

Example.

You moved to a new home less than 50 miles from your former home because you changed main job locations. Your old main job location was 3 miles from your former home. Your new main job location is 60 miles from that home. Because your new main job location is 57 miles farther from your former home than the distance from your former home to your old main job location, you meet the distance test.

First job or return to full-time work.

If you go to work full time for the first time, your place of work must be at least 50 miles from your former home to meet the distance test.

If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home.

Armed Forces.

If you are in the Armed Forces and you moved because of a permanent change of station, you don’t have to meet the distance test. See Members of the Armed Forces, later.

Main job location.

Your main job location is usually the place where you spend most of your working time. This could be your office, plant, store, shop, or other location. If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work.

Union members.

If you work for several employers on a short-term basis and you get work under a union hall system (such as a construction or building trades worker), your main job location is the union hall.

More than one job.

If you have more than one job at any time, your main job location depends on the facts in each case. The more important factors to be considered are:

• The total time you spend at each place,
• The amount of work you do at each place, and
• How much money you earn at each place.

 

Table 1. Satisfying the Time Test for Employees and Self-Employed Persons

IF you are…	THEN you satisfy the time test by meeting the…
an employee	39-week test for employees.
self-employed	78-week test for self-employed persons.
both self-employed and an employee at the same time	78-week test for a self-employed person or the 39-week test for an employee. Your principal place of work determines which test applies.
both self-employed and an employee, but unable to satisfy the 39-week test for employees	78-week test for self-employed persons.

 

Time Test

To deduct your moving expenses, you also must meet one of the following two time tests.

• The time test for employees.
• The time test for self-employed persons.

Both of these tests are explained below. See Table 1 for a summary of these tests.

You can deduct your moving expenses before you meet either of the time tests. See Time Test Not Yet Met , later.

Time Test for Employees

If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location (39-week test). Full-time employment depends on what is usual for your type of work in your area.

For purposes of this test, the following four rules apply.

• You count only your full-time work as an employee, not any work you do as a self-employed person.
• You don’t have to work for the same employer for all 39 weeks.
• You don’t have to work 39 weeks in a row.
• You must work full time within the same general commuting area for all 39 weeks.

Temporary absence from work.

You are considered to have worked full time during any week you are temporarily absent from work because of illness, strikes, lockouts, layoffs, natural disasters, or similar causes. You are also considered to have worked full time during any week you are absent from work for leave or vacation provided for in your work contract or agreement.

Seasonal work.

If your work is seasonal, you are considered to be working full time during the off-season only if your work contract or agreement covers an off-season period of less than 6 months. For example, a school teacher on a 12-month contract who teaches on a full-time basis for more than 6 months is considered to have worked full time for the entire 12 months.

Figure B. Can You Deduct Expenses for a Non-Military Move Within the United States?¹

 

 

 

Figure B

Please click here for the text description of the image.

 

 

Time Test for Self-Employed Persons

If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you arrive in the general area of your new job location (78-week test).

For purposes of the time test for self-employed persons, the following three rules apply.

• You count any full-time work you do either as an employee or as a self-employed person.
• You don’t have to work for the same employer or be self-employed in the same trade or business for the 78 weeks.
• You must work within the same general commuting area for all 78 weeks.

 

Example.

You are a self-employed accountant who moves from Atlanta to New York City, and begin to work there on December 1, 2017. You pay moving expenses in 2017 and 2018 in connection with this move. On April 16, 2018, when you file your income tax return for the year 2017, you have been performing services as a self-employed individual on a full-time basis in New York City for approximately 20 weeks. Although you haven’t satisfied the 78-week employment condition at this time, you can deduct your 2017 moving expenses on your 2017 income tax return as there is still sufficient time remaining before December 1, 2019, to satisfy such condition. You can deduct any moving expenses you pay in 2018 on your 2018 income tax return even if you haven’t met the 78-week test. You have until December 1, 2019, to satisfy this requirement.

Self-employment.

You are self-employed if you work as the sole owner of an unincorporated business or as a partner in a partnership carrying on a business. You aren’t considered self-employed if you are semi-retired, are a part-time student, or work only a few hours each week.

Full-time work.

You can count only those weeks during which you work full time as a week of work. Whether you work full time during any week depends on what is usual for your type of work in your area. For example, you are a self-employed dentist and maintain office hours 4 days a week. You are considered to perform services full time if maintaining office hours 4 days a week isn’t unusual for other self-employed dentists in your area.

Temporary absence from work.

You are considered to be self-employed on a full-time basis during any week you are temporarily absent from work because of illness, strikes, natural disasters, or similar causes.

Seasonal trade or business.

If your trade or business is seasonal, the off-season weeks when no work is required or available may be counted as weeks during which you worked full time. The off-season must be less than 6 months and you must work full time before and after the off-season.

Example.

You own and operate a motel at a beach resort. The motel is closed for 5 months during the off-season. You work full time as the operator of the motel before and after the off-season. You are considered self-employed on a full-time basis during the weeks of the off-season.

If you were both an employee and self-employed, see Table 1 for the requirements.

Example.

Justin quit his job and moved from the east coast to the west coast to begin a full-time job as a cabinet-maker for the Cabinet Shop. He generally worked at the shop about 40 hours each week. Shortly after the move, Justin also began operating a cabinet-installation business from his home for several hours each afternoon and all day on weekends. Because Justin’s principal place of business is the Cabinet Shop, he can satisfy the time test by meeting the 39-week test.

If Justin is unable to satisfy the requirements of the 39-week test during the 12-month period immediately following his arrival in the general location of his new principal place of work, he can satisfy the 78-week test.

Joint Return

If you are married, file a joint return, and both you and your spouse work full time, either of you can satisfy the full-time work test individually. However, you can’t add the weeks your spouse worked to the weeks you worked to satisfy that test.

Time Test Not Yet Met

You can deduct your moving expenses on your 2017 tax return even though you haven’t met the time test by the date your 2017 return is due. You can do this if you expect to meet the 39-week test in 2018 or the 78-week test in 2018 or 2019.

If you don’t deduct your moving expenses on your 2017 return, and you later meet the time test, you can file an amended return for 2017 to take the deduction. See When To Deduct Expenses , later, for more details.

Failure to meet the time test.

If you deduct moving expenses but don’t meet the time test in 2018 or 2019, you must either:

• Report your moving expense deduction as other income on your Form 1040 for the year you can’t meet the test; or
• Use Form 1040X to amend your 2017 return, figuring your tax without the moving expense deduction.

 

Example.

You arrive in the general area of your new job location, as an employee, on September 12, 2017. You deduct your moving expenses on your 2017 return, the year of the move, even though you haven’t yet met the time test by the date your return is due. If you don’t meet the 39-week test during the 12-month period following your arrival in the general area of your new job location, you must either:

• Report your moving expense deduction as other income on your Form 1040 for 2018; or
• Use Form 1040X to amend your 2017 return, figuring your tax without the moving expense deduction.

 

Exceptions to the Time Test

You don’t have to meet the time test if one of the following applies.

• You are in the Armed Forces and you moved because of a permanent change of station. See Members of the Armed Forces , later.
• Your main job location was outside the United States and you moved to the United States because you retired. See Retirees or Survivors Who Move to the United States , later.
• You are the survivor of a person whose main job location at the time of death was outside the United States. See Retirees or Survivors Who Move to the United States , later.
• Your job at the new location ends because of death or disability.
• You are transferred for your employer’s benefit or laid off for a reason other than willful misconduct. For this exception, you must have obtained full-time employment and you must have expected to meet the test at the time you started the job.

 

Retirees or Survivors Who Move to the United States

If you are a retiree who was working abroad or a survivor of a decedent who was working abroad and you move to the United States or one of its possessions, you don’t have to meet the time test, discussed earlier. However, you must meet the requirements discussed below under Retirees who were working abroad or Survivors of decedents who were working abroad.

 

 

If you are living in the United States, retire, and then move and remain retired, you can’t claim a moving expense deduction for that move.

United States defined.

For this section of this publication, the term “United States” includes the possessions of the United States.

Retirees who were working abroad.

You can deduct moving expenses for a move to a new home in the United States when you permanently retire. However, both your former main job location and your former home must have been outside the United States.

Permanently retired.

You are considered permanently retired when you cease gainful full-time employment or self-employment. If, at the time you retire, you intend your retirement to be permanent, you will be considered retired even though you later return to work. Your intention to retire permanently may be determined by:

• Your age and health,
• The customary retirement age for people who do similar work,
• Whether you receive retirement payments from a pension or retirement fund, and
• The length of time before you return to full-time work.

 

Decedents.

Qualified deductible moving expenses are allowed on a final return (Form 1040 or 1040NR) when a taxpayer has moved and dies within the same calendar year. The personal representative filing on behalf of that taxpayer should complete and attach Form 3903 to the final return.

A personal representative can be an executor, administrator, or anyone who is in charge of the deceased person’s property. For more information, see Pub. 559, Survivors, Executors, and Administrators.

Survivors of decedents who were working abroad.

If you are the spouse or the dependent of a person whose main job location at the time of death was outside the United States, you can deduct moving expenses if the following five requirements are met.

• The move is to a home in the United States.
• The move begins within 6 months after the decedent’s death. (When a move begins is described below.)
• The move is from the decedent’s former home.
• The decedent’s former home was outside the United States.
• The decedent’s former home was also your home.

 

When a move begins.

A move begins when one of the following events occurs.

• You contract for your household goods and personal effects to be moved to your home in the United States, but only if the move is completed within a reasonable time.
• Your household goods and personal effects are packed and on the way to your home in the United States.
• You leave your former home to travel to your new home in the United States.

 

Deductible Moving Expenses

If you meet the requirements discussed earlier under Who Can Deduct Moving Expenses , you can deduct the reasonable expenses of:

• Moving your household goods and personal effects (including in-transit or foreign-move storage expenses), and
• Traveling (including lodging but not meals) to your new home.

 

You can’t deduct any expenses for meals.

Reasonable expenses.

You can deduct only those expenses that are reasonable for the circumstances of your move. For example, the cost of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. If, during your trip to your new home, you stop over, or make side trips for sightseeing, the additional expenses for your stopover or side trips aren’t deductible as moving expenses.

Example.

Beth’s employer transferred her from Boston, Massachusetts, to Buffalo, New York. On her way to Buffalo, Beth drove into Canada to visit the Toronto Zoo. Since Beth’s excursion into Canada was away from the usual Boston-Buffalo route, the expenses paid or incurred for the excursion aren’t deductible. Beth can only deduct what it would have cost to drive directly from Boston to Buffalo. Likewise, Beth can’t deduct any expenses, such as the cost of a hotel room, caused by the delay for sightseeing.

Travel by car.

If you use your car to take yourself, members of your household, or your personal effects to your new home, you can figure your expenses by deducting either:

• Your actual expenses, such as the amount you pay for gas and oil for your car, if you keep an accurate record of each expense, or
• The standard mileage rate of 17 cents a mile.

Whether you use actual expenses or the standard mileage rate to figure your expenses, you can deduct the parking fees and tolls you pay to move. You can’t deduct any part of general repairs, general maintenance, insurance, or depreciation for your car.

Member of your household.

You can deduct moving expenses you pay for yourself and members of your household. A member of your household is anyone who has both your former and new home as his or her home. It doesn’t include a tenant or employee, unless that person is your dependent.

Moves to Locations in the United States

If you meet the requirements under Who Can Deduct Moving Expenses , earlier, you can deduct expenses for a move to the area of a new main job location within the United States or its possessions. Your move may be from one U.S. location to another or from a foreign country to the United States.

Household goods and personal effects.

You can deduct the cost of packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home. For purposes of moving expenses, the term “personal effects” includes, but isn’t limited to, movable personal property that the taxpayer owns and frequently uses.

If you use your own car to move your things, see Travel by car, earlier.

You can deduct any costs of connecting or disconnecting utilities required because you are moving your household goods, appliances, or personal effects.

You can deduct the cost of shipping your car and your household pets to your new home.

You can deduct the cost of moving your household goods and personal effects from a place other than your former home. Your deduction is limited to the amount it would have cost to move them from your former home.

Example.

Paul Brown has been living and working in North Carolina for the last 4 years. Because he has been renting a small apartment, he stored some furniture at his parents’ home in Georgia. Paul got a job in Washington, DC. It cost him $900 to move the furniture from his North Carolina apartment to Washington and $3,000 to move the stored furniture from Georgia to Washington. It would have cost $1,800 to ship the stored furniture from North Carolina to Washington. He can deduct only $1,800 of the $3,000 he paid. The amount he can deduct for moving his furniture is $2,700 ($900 + $1,800).

You can’t deduct the cost of moving furniture you buy on the way to your new home.

Storage expenses.

You can include the cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home.

Travel expenses.

You can deduct the cost of transportation and lodging for yourself and members of your household while traveling from your former home to your new home. This includes expenses for the day you arrive.

The day of arrival is the day you secure lodging at the new place of residence, even if the lodging is on a temporary basis.

You can include any lodging expenses you had in the area of your former home within 1 day after you could no longer live in your former home because your furniture had been moved.

The members of your household don’t have to travel together or at the same time. However, you can only deduct expenses for one trip per person. If you use your own car, see Travel by car, earlier.

Example.

In February 2017, Josh and Robyn moved from Minneapolis to Washington, DC, where Josh was starting a new job. Josh drove the family car to Washington, a trip of 1,100 miles. His expenses were $187 for mileage (1,100 miles x 17 cents a mile) plus $40 for tolls and $150 for lodging, for a total of $377. One week later, Robyn flew from Minneapolis to Washington. Her only expense was her $400 plane ticket. Their deduction is $777 (Josh’s $377 + Robyn’s $400).

Moves to Locations Outside the United States

To deduct expenses for a move outside the United States, you must move to the area of a new place of work outside the United States and its possessions. You must meet the requirements under Who Can Deduct Moving Expenses , earlier.

Deductible expenses.

If your move is to a location outside the United States and its possessions, you can deduct the following expenses.

• The cost of moving household goods and personal effects from your former home to your new home.
• The cost of traveling (including lodging) from your former home to your new home.
• The cost of moving household goods and personal effects to and from storage.
• The cost of storing household goods and personal effects while you are at the new job location.

The first two items were explained earlier under Moves to Locations in the United States . The last two items are discussed later.

Moving goods and effects to and from storage.

You can deduct the reasonable expenses of moving your personal effects to and from storage.

Storage expenses.

You can deduct the reasonable expenses of storing your household goods and personal effects for all or part of the time the new job location remains your main job location.

Moving expenses allocable to excluded foreign income.

If you live and work outside the United States, you may be able to exclude from income part or all of the income you earn in the foreign country. You may also be able to claim a foreign housing exclusion or deduction. However, if you do claim the foreign earned income or foreign housing exclusion, you can’t deduct the part of your moving expenses that relates to the excluded income.

Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, explains how to figure the part of your moving expenses that relates to excluded income. You can get the publication from most U.S. embassies and consulates, or see How To Get Tax Help at the end of this publication.

Nondeductible Expenses

You can’t deduct the following items as moving expenses.

• Any part of the purchase price of your new home.
• Car tags.
• Driver’s license.
• Expenses of buying or selling a home (including closing costs, mortgage fees, and points).
• Expenses of entering into or breaking a lease.
• Home improvements to help sell your home.
• Loss on the sale of your home.
• Losses from disposing of memberships in clubs.
• Mortgage penalties.
• Pre-move househunting expenses.
• Real estate taxes.
• Refitting of carpet and draperies.
• Return trips to your former residence.
• Security deposits (including any given up due to the move).
• Storage charges except those incurred in transit and for foreign moves.

 

No double deduction.

You can’t take a moving expense deduction and a business expense deduction for the same expenses. You must decide if your expenses are deductible as moving expenses or as business expenses. For example, expenses you have for travel, meals, and lodging while temporarily working at a place away from your regular place of work may be deductible as business expenses if you are considered away from home on business. In most cases, your work at a single location is considered temporary if it is realistically expected to last (and does in fact last) for 1 year or less.

See Pub. 463, Travel, Entertainment, Gift, and Car Expenses, for information on deducting your business expenses.

Reimbursements

This section explains how to report a reimbursement (including advances and allowances) on your tax return. It covers reimbursements for any of your moving expenses discussed in this publication. It also explains the types of reimbursements on which your employer must withhold income, social security, and Medicare taxes.

Types of Reimbursement Plans

If you receive a reimbursement for your moving expenses, how you report this amount and your expenses depends on whether the reimbursement is paid to you under an accountable plan or a nonaccountable plan. For a quick overview of how to report your reimbursement and moving expenses, see Table 2 in the section on How and When To Report, later.

Your employer should tell you what method of reimbursement is used and what records are required.

Accountable Plans

To be an accountable plan, your employer’s reimbursement arrangement must require you to meet all three of the following rules.

• Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Two examples of this are the reasonable expenses of moving your possessions from your former home to your new home, and traveling from your former home to your new home.
• You must adequately account to your employer for these expenses within a reasonable period of time.
• You must return any excess reimbursement or allowance within a reasonable period of time.

 

Adequate accounting.

You adequately account for your moving expenses by giving your employer documentation of those expenses, such as a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it. Documentation includes receipts, canceled checks, and bills.

Reasonable period of time.

What constitutes a “reasonable period of time” depends on the facts and circumstances of your situation. However, regardless of the facts and circumstances, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time.

• You receive an advance within 30 days of the time you have an expense.
• You adequately account for your expenses within 60 days after they were paid or incurred.
• You return any excess reimbursement within 120 days after the expense was paid or incurred.
• You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement.

 

Excess reimbursement.

This includes any amount you are paid (including advances and allowances) that is more than the moving expenses that you adequately accounted for to your employer within a reasonable period of time.

Returning excess reimbursements.

You must be required to return any excess reimbursement for your moving expenses to the person paying the reimbursement. Excess reimbursement includes any amount for which you didn’t adequately account within a reasonable period of time. For example, if you received an advance and you didn’t spend all the money on deductible moving expenses, or you don’t have proof of all your expenses, you have an excess reimbursement.

You meet accountable plan rules.

If for all reimbursements you meet the three rules for an accountable plan (listed earlier), your employer shouldn’t include any reimbursements of expenses in your income in box 1 of your Form W-2, Wage and Tax Statement. Instead, your employer should include the reimbursements in box 12 of your Form W-2 with code P.

Example.

You lived in Boston and accepted a job in Atlanta. Under an accountable plan, your employer reimbursed you for your actual traveling expenses from Boston to Atlanta and the cost of moving your furniture to Atlanta. Your employer will include the reimbursement on your Form W-2, box 12, with code P. If your moving expenses are more than your reimbursement, you may be able to deduct your additional expenses (see How and When To Report, later).

 

You don’t meet accountable plan rules.

You may be reimbursed by your employer, but you may not meet all three rules for part of your expenses.

If your deductible expenses are reimbursed under an otherwise accountable plan but you don’t return, within a reasonable period, any reimbursement of expenses for which you didn’t adequately account, then only the amount for which you did adequately account is considered as paid under an accountable plan. The remaining expenses are treated as having been reimbursed under a nonaccountable plan (discussed below).

Reimbursement of nondeductible expenses.

You may be reimbursed by your employer for moving expenses, some of which are deductible expenses and some of which aren’t deductible. The reimbursements you receive for the nondeductible expenses and any allowances for miscellaneous or unspecified expenses are treated as paid under a nonaccountable plan (see below) and are included in your income. If you are reimbursed by your employer for the taxes you must pay (including social security and Medicare taxes) because you have received taxable moving expense reimbursements, you must pay tax on this reimbursement as well, and it is treated as paid under a nonaccountable plan.

Nonaccountable Plans

A nonaccountable plan is a reimbursement arrangement that doesn’t meet the three rules listed earlier under Accountable Plans .

In addition, the following payments will be treated as paid under a nonaccountable plan.

• Excess reimbursements you fail to return to your employer.
• Reimbursements of nondeductible expenses. See Reimbursement of nondeductible expenses,

If an arrangement pays for your moving expenses by reducing your wages, salary, or other pay, the amount of the reduction will be treated as a payment made under a nonaccountable plan. This is because you are entitled to receive the full amount of your pay regardless of whether you had any moving expenses.

If you aren’t sure if the moving expense reimbursement arrangement is an accountable or nonaccountable plan, ask your employer.

Your employer will add the amount of any reimbursement paid to you under a nonaccountable plan to your wages, salary, or other pay. Your employer will report the total in box 1 of your Form W-2.

Example.

To get you to work in another city, your new employer reimburses you under an accountable plan for the $7,500 loss on the sale of your home. Because this is a reimbursement of a nondeductible expense, it is treated as paid under a nonaccountable plan and must be included as income in box 1 of your Form W-2.

Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970

Don’t include in income any moving expense payment you received under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. These payments are made to persons displaced from their homes, businesses, or farms by federal projects.

Tax Withholding and Estimated Tax

Your employer must withhold income, social security, and Medicare taxes from reimbursements and allowances paid to you that are included in your income. See Reimbursements included in income, later.

Reimbursements excluded from income.

Your employer shouldn’t include in your wages reimbursements paid under an accountable plan (explained earlier) for moving expenses that you:

• Could deduct if you had paid or incurred them, and
• Didn’t deduct in an earlier year.

These reimbursements are fringe benefits excludable from your income as qualified moving expense reimbursements. Your employer should report these reimbursements on your Form W-2, box 12, with code P.

You can’t claim a moving expense deduction for expenses covered by reimbursements excluded from income (see Accountable Plans under Types of Reimbursement Plans, earlier).

Expenses deducted in earlier year.

If you receive a reimbursement this year for moving expenses deducted in an earlier year, and the reimbursement isn’t included as wages in box 1 of your Form W-2, you must include the reimbursement in income on Form 1040, line 21. Your employer should show the amount of your reimbursement in box 12 of your Form W-2.

Reimbursements included in income.

Your employer must include in your income any reimbursements made (or treated as made) under a nonaccountable plan, even though they are for deductible moving expenses. See Nonaccountable Plans under Types of Reimbursement Plans, earlier. Your employer also must include in your gross income as wages any reimbursements of, or payments for, nondeductible moving expenses. This includes amounts your employer reimbursed you under an accountable plan (explained earlier) for meals, househunting trips, and real estate expenses. It also includes reimbursements that exceed your deductible expenses and that you don’t return to your employer.

Reimbursement for deductible and nondeductible expenses.

If your employer reimburses you for both deductible and nondeductible moving expenses, your employer must determine the amount of the reimbursement that isn’t taxable and not subject to withholding. Your employer must treat any remaining amount as taxable wages and withhold income, social security, and Medicare taxes.

Amount of income tax withheld.

If the reimbursements or allowances you receive are taxable, the amount of income tax your employer will withhold depends on several factors. It depends in part on whether income tax is withheld from your regular wages, on whether the reimbursements and allowances are added to your regular wages, and on any information you have given to your employer on Form W-4, Employee’s Withholding Allowance Certificate.

Your employer can treat your reimbursements as supplemental wages and not include the reimbursements and allowances in your regular wages. The employer can withhold income tax on supplemental wages at a flat rate which may be different from your regular tax rate.

Estimated tax.

If you must make estimated tax payments, you need to take into account any taxable reimbursements and deductible moving expenses in figuring your estimated tax. For details about estimated taxes, see Pub. 505, Tax Withholding and Estimated Tax.

How and When To Report

This section explains how and when to report your moving expenses and any reimbursements or allowances you received for your move. For a quick overview, see Table 2.

Form 3903

Use Form 3903 to figure your moving expense deduction. Use a separate Form 3903 for each move for which you are deducting expenses.

Don’t file Form 3903 if all of the following apply.

• You moved to a location outside the United States in an earlier year.
• You are claiming only storage fees while you were away from the United States.
• Any amount your employer paid for the storage fees is included as wages in box 1 of your Form W-2.

Instead, enter the storage fees (after the reduction for the part that is allocable to excluded income) on Form 1040, line 26, and enter “Storage” on the dotted line next to the amount.

If you meet the special rules for members of the Armed Forces, see How to complete Form 3903 for members of the Armed Forces under Members of the Armed Forces, later.

Completing Form 3903.

Complete Worksheet 1 or the Distance Test Worksheet in the instructions for Form 3903 to see whether you meet the distance test. If so, complete lines 1 through 3 of the form using your actual expenses (except, if you use your own car, you can figure expenses based on the standard mileage rate, instead of actual amounts for gas and oil). Enter on line 4 the total amount of your moving expense reimbursement that was excluded from your wages. This excluded amount should be identified on Form W-2, box 12, with code P.

Expenses greater than reimbursement.

If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. This is your moving expense deduction.

Expenses equal to or less than reimbursement.

If line 3 is equal to or less than line 4, you have no moving expense deduction. Subtract line 3 from line 4 and, if the result is more than zero, include it as income on Form 1040, line 7.

 

Table 2. Reporting Your Moving Expenses and Reimbursements

IF your Form W-2 shows…	AND you have…	THEN…
your reimbursement reported only in box 12 with code P	moving expenses greater than the amount in box 12	file Form 3903 showing all allowable expenses* and reimbursements.
your reimbursement reported only in box 12 with code P	moving expenses equal to the amount in box 12	don’t file Form 3903.
your reimbursement divided between box 12 and box 1	moving expenses greater than the amount in box 12	file Form 3903 showing all allowable expenses,* but only the reimbursements reported in box 12 of Form W-2.
your entire reimbursement reported as wages in box 1	moving expenses	file Form 3903 showing all allowable expenses,* but don’t show any reimbursements.
no reimbursement	moving expenses	file Form 3903 showing all allowable expenses.*
* See Deductible Moving Expenses, earlier, for allowable expenses.

Where to deduct.

Deduct your moving expenses on Form 1040, line 26. The amount of moving expenses you can deduct is shown on Form 3903, line 5.

You can’t deduct moving expenses on Form 1040EZ or Form 1040A.

When To Deduct Expenses

You may have a choice of when to deduct your moving expenses.

Expenses not reimbursed.

If you weren’t reimbursed, deduct your moving expenses in the year you paid or incurred the expenses.

Example.

In December 2016, your employer transferred you to another city in the United States, where you still work. You are single and weren’t reimbursed for your moving expenses. In 2016, you paid to move your furniture and deducted these expenses on your 2016 tax return. In January 2017, you paid for travel to the new city. You can deduct these additional expenses on your 2017 tax return.

Expenses reimbursed.

If you are reimbursed for your expenses and you use the cash method of accounting, you can deduct your expenses either in the year you paid them or in the year you received the reimbursement. If you use the cash method of accounting, you can choose to deduct the expenses in the year you are reimbursed even though you paid the expenses in a different year. See Choosing when to deduct next.

If you deduct your expenses and you receive the reimbursement in a later year, you must include the reimbursement in your income on Form 1040, line 21.

Choosing when to deduct.

If you use the cash method of accounting, which is used by most individuals, you can choose to deduct moving expenses in the year your employer reimburses you if:

• You paid the expenses in a year before the year of reimbursement, or
• You paid the expenses in the year immediately after the year of reimbursement but by the due date, including extensions, for filing your return for the reimbursement year.

 

How to make the choice.

You choose to deduct moving expenses in the year you received reimbursement by taking the deduction on your return, or amended return, for that year.

You can’t deduct any moving expenses for which you received a reimbursement that wasn’t included in your income.

Illustrated Example

Tom and Peggy are married and have two children. They owned a home in Detroit where Tom worked. On February 7, 2017, Tom’s employer told him that he would be transferred to San Diego as of April 13 that year. Peggy flew to San Diego on March 1 to look for a new home. She put a down payment of $25,000 on a house being built and returned to Detroit on March 4. Tom and Peggy sold their Detroit home for $1,500 less than they paid for it. They contracted to have their personal effects moved to San Diego on April 3. The family drove to San Diego where they found that their new home wasn’t finished. They stayed in a nearby motel until the house was ready on May 1. On April 13, Tom went to work in the San Diego plant where he still works.

Their records for the move show:

1)	Peggy’s pre-move househunting trip:
	Travel and lodging		$ 449
	Meals		75		$ 524
2)	Down payment on San Diego home				25,000
3)	Real estate commission paid on sale of Detroit home				3,500
4)	Loss on sale of Detroit home (not including real estate commission)				1,500
5)	Amount paid for moving personal effects (furniture, other household goods, etc.)				8,000
6)	Expenses of driving to San Diego:
	Mileage (Start 14,278; End 16,478) 2,200 miles at 17 cents a mile		$ 374
	Lodging		180
	Meals		320		874
7)	Cost of temporary living expenses in San Diego:
	Motel rooms		$1,450
	Meals		2,280		3,730
Total					$43,128

 

Tom was reimbursed $10,753 under an accountable plan. His employer gave him the following breakdown of the reimbursement that was allowed under the employer’s plan.

Moving personal effects		$ 6,800
Travel (and lodging) to San Diego		554
Travel (and lodging) for househunting trip		449
Lodging for temporary quarters		1,450
Loss on sale of home		1,500
Total reimbursement		$10,753

 

The employer included this reimbursement on Tom’s Form W-2 for the year. The reimbursement of allowable expenses, $7,354 for moving household goods and travel to San Diego, was included in box 12 of Form W-2. His employer identified this amount with code P.

The employer included the balance, $3,399 reimbursement of nonallowable expenses, in box 1 of Form W-2 with Tom’s other wages. Tom must include this amount on Form 1040, line 7. The employer withholds taxes from the $3,399, as discussed under Reimbursement for deductible and nondeductible expenses under Tax Withholding and Estimated Tax, earlier. Also, Tom’s employer could have given him a separate Form W-2 for his moving expense reimbursement.

To figure his tax deduction for moving expenses, Tom enters the following amounts on Form 3903.

Item 5 — moving personal effects (line 1)		$8,000
Item 6 — driving to San Diego ($374 + $180) (line 2)		554
Total tax deductible moving expenses (line 3)		$8,554
Minus: Reimbursement included in box 12 of Form W-2 (line 4)		7,354
Tax deduction for moving expenses (line 5)		$1,200

 

Tom’s Form 3903 is shown later. He also enters his deduction, $1,200, on Form 1040, line 26.

Nondeductible expenses.

 

Of the $43,128 expenses that Tom and Peggy incurred, the following items totaling $34,574 ($43,128 – $8,554) can’t be deducted.

• Item 1 — pre-move househunting expenses of $524.
• Item 2 — the $25,000 down payment on the San Diego home. If any part of it were for payment of deductible taxes or interest on the mortgage on the house, that part would be deductible as an itemized deduction.
• Item 3 — the $3,500 real estate commission paid on the sale of the Detroit home. The commission is used to figure the gain or loss on the sale.
• Item 4 — the $1,500 loss on the sale of the Detroit home.
• Item 6 — the $320 expense for meals while driving to San Diego. (However, the lodging and car expenses are deductible.)
• Item 7 — temporary living expenses of $3,730.

2017 Form 3903 Moving Expenses

Please click here for the text description of the image.

 

Members of the Armed Forces

If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you don’t have to meet the distance and time tests, discussed earlier. You can deduct your unreimbursed moving expenses.

A permanent change of station includes:

• A move from your home to your first post of active duty,
• A move from one permanent post of duty to another, and
• A move from your last post of duty to your home or to a nearer point in the United States. The move must occur within 1 year of ending your active duty or within the period allowed under the Joint Travel Regulations.

 

Spouse and dependents.

If a member of the Armed Forces dies, is imprisoned, or deserts, a permanent change of station for the spouse or dependent includes a move to:

• The place of enlistment;
• The member’s, spouse’s, or dependent’s home of record; or
• A nearer point in the United States.

 

If the military moves you, your spouse, and dependents, to or from separate locations, the moves are treated as a single move to your new main job location.

Services or reimbursements provided by government.

Don’t include in income the value of moving and storage services provided by the government because of a permanent change of station. In general, if the total reimbursements or allowances you receive from the government because of the move are more than your actual moving expenses, the government must include the excess in your wages on Form W-2. However, the excess portion of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance isn’t included in income and shouldn’t be included in box 1 of Form W-2.

If your reimbursements or allowances are less than your actual moving expenses, don’t include the reimbursements or allowances in income. You can deduct the expenses that are more than your reimbursements. See Deductible Moving Expenses, earlier.

How to complete Form 3903 for members of the Armed Forces.

Take the following steps.

1. Complete lines 1 through 3 of the form, using your actual expenses. Don’t include any expenses for moving services provided by the government. Also, don’t include any expenses that were reimbursed by an allowance you don’t have to include in your income.
2. Enter on line 4 the total reimbursements and allowances you received from the government for the expenses claimed on lines 1 and 2. Don’t include the value of moving or storage services provided by the government. Also, don’t include any part of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance.
3. Complete line 5. If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. This is your moving expense deduction. If line 3 is equal to or less than line 4, you don’t have a moving expense deduction. Subtract line 3 from line 4 and, if the result is more than zero, enter it on Form 1040, line 7.

If the military moves you, your spouse, and dependents, to or from different locations, treat these moves as a single move.

 

 

Don’t deduct any expenses for moving or storage services provided by the government.