Publication 54 - Tax Guide For U.s. Citizens And U.s. Citizens Abroad

your Canadian, Israeli, or Mexican source in-

not required to meet the time test. The other

trip from your former home to your new

requirements must be met.

come. If you or a member of your family is

home (including costs of getting pass-

enrolled at a Canadian college or university, the

ports).

limit does not apply to gifts to that school. For

Closely Related to

additional information on the deduction of contri-

Members of your household. A member

the Start of Work

butions to Canadian charities, see Publication

of your household includes anyone who has

597.

both your former and new home as his or her

Your move must be closely related, both in time

home. It does not include a tenant or employee

For more information on these treaty

and in place, to the start of work at your new job

unless that person is your dependent.

provisions, write to:

location.

Foreign moves. A foreign move is a move

Closely related in time. In general, moving

in connection with the start of work at a new job

expenses you incur within one year from the

Internal Revenue Service

location outside the United States and its pos-

date you first report to work at the new location

International Section

sessions. A foreign move does not include a

are considered closely related in time to the start

P.O. Box 920

move back to the United States or its posses-

of work.

Bensalem, PA 19020-8518.

sions.

If you do not move within 1 year, you ordina-

rily cannot deduct the expenses unless you can

show that circumstances existed that prevented

Allocation of Moving Expenses

the move within that time.

Moving Expenses

When your new place of work is in a foreign

Example. Your family moved more than a

country, your moving expenses are directly con-

If you moved to a new home in 2001 because of

year after you started work at a new location.

nected with the income earned in that foreign

your job or business, you may be able to deduct

Their move was delayed because you allowed

country. If you exclude all or part of the income

the expenses of your move. To be deductible,

your child to complete high school. You can

that you earn at the new location under the

the moving expenses must have been paid or

deduct your allowable moving expenses.

foreign earned income exclusion or the foreign

incurred in connection with starting work at a

housing exclusion, you cannot deduct the part of

Closely related in place. A move is generally

new job location.

your moving expense that is allocable to the

considered closely related in place to the start of

excluded income.

work if the distance from your new home to the

Requirements

Also, you cannot deduct the part of the mov-

new job location is not more than the distance

from your former home to the new job location. A

ing expense related to the excluded income if

You may be able to deduct moving expenses if

move that does not meet this requirement may

you move from a foreign country to the United

your move meets the following requirements.

qualify if you can show that:

States and all 3 of the following conditions apply.

•

Distance.

•

You are reimbursed for your move by your

1) A condition of employment requires you to

•

Time.

live at your new home, or

employer.

•

Closely related to the start of work.

2) You will spend less time or money com-

You are able to treat the reimbursement

muting from your new home to your new

as compensation for services performed in

job.

the foreign country.

Distance

•

You choose to exclude your foreign

The distance from your new job location to your

Deductible Expenses

earned income.

former home must be at least 50 miles more

than the distance from your old job location to

You can only deduct certain expenses.

your former home. If you did not have an old job

The moving expense is connected with earn-

location, your new job location must be at least

Reasonable expenses. You can only deduct

ing the income (including reimbursements, as

50 miles from your former home.

expenses that are reasonable for the circum-

discussed in chapter 4 under Reimbursement of

stances of your move. The cost of traveling from

moving expenses) either entirely in the year of

your former home to your new one should be by

the move or in 2 years. It is connected with

Time

the shortest, most direct route available by con-

earning the income entirely in the year of the

ventional transportation.

move if you qualify under the bona fide resi-

You must work full time for at least 39 weeks

dence test or physical presence test for at least

during the first 12 months after you move. If

Reimbursements. If you are reimbursed by

you are self-employed, you must work full time

your employer for allowable moving expenses,

120 days during that tax year.

for at least 39 weeks during the first 12

these reimbursements may have been excluded

If you do not qualify under either the bona

months AND for at least 78 weeks during the

from your income. You cannot deduct moving

fide residence test or the physical presence test

expenses for which you were reimbursed by

first 24 months after you move.

for at least 120 days during the year of the move,

your employer unless the reimbursement was

the expense is connected with earning the in-

Retirees. You can deduct your allowable mov-

included in your income.

come in 2 years. The moving expense is con-

ing expenses if you move to the United States

nected with the year of the move and the

Deductible moving expenses. Some of the

when you permanently retire if your principal

following year if the move is from the United

moving expenses that you may be able to de-

place of work and former home were outside the

States to a foreign country. The moving expense

duct include the reasonable costs of:

United States and its possessions. You do not

is connected with the year of the move and the

have to meet the time test. The other require-

1) Moving household goods and personal ef-

preceding year if the move is from a foreign

ments must be met.

fects (including packing, crating, in-transit

country to the United States.

storage, and insurance) of both you and

To figure the amount of your moving ex-

Survivors. You can deduct moving expenses

members of your household. For for-

pense that is allocable to your excluded foreign

for a move to a home in the United States if you

eign moves, costs of moving household

earned income (and not deductible), you must

are the spouse or dependent of a person whose

goods and personal effects include rea-

multiply your total moving expense deduction by

principal place of work at the time of death was

sonable expenses of moving the items to

a fraction. The numerator (top number) of the

outside the United States and its possessions.

and from storage and storing them while

fraction is the total of your excluded foreign

The move must begin within 6 months after the

your new place of work abroad is your

earned income and housing amounts for both

decedent’s death and must be from the

principal place of work.

years and the denominator (bottom number) of

decedent’s former home outside the United

States and its possessions in which you lived

2) Transportation and lodging for yourself

the fraction is your total foreign earned income

with the decedent at the time of death. You are

and members of your household for one

for both years.

Chapter 5 Exemptions, Deductions, and Credits

Page 29

Publication 54 - Tax Guide For U.s. Citizens And U.s. Citizens Abroad - 2001 Page 29

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