ou have just been matched to your
dream residency program and the partying is about to subside. Now that you
have a clear focus of where you will end up in the next 3 to 5 years, as a
type-A med student, you probably have already started worrying about
moving all your belongings to your new destination. Moving can be a real
headache, but with a few tips, it can work to your advantage when comes
tax time. Are you aware that Uncle Sam can help those who do not have
their moving expenses reimbursed? No kidding … you can get tax
relief on your moving expenses, and here is how:
First, to be eligible for deducting your moving expenses on your tax
return, you must meet the following criteria:
Generally, if you incur moving expenses within one year of the
date you first reported to work at the new location, your move is
considered to have taken place within a reasonable time period from the
first day you started your new job. However, it is not necessary for you
to arrange work before moving to a new location, as long as you actually
do go to work.
What if you do not move within one year? If you can show that you
have a good reason for not moving within that time, you will still be
able to deduct your allowable moving expenses.
In order to deduct your moving expense, you also have to meet the
following distance test:
- Is the distance from your new home to the new job location shorter
than the distance from your former home to the new job location?
If yes, then go to (b). If no, then go to c).
- Is your new primary job location at least 50 miles farther
from your former home than your old primary job location? For
instance, if your old primary job was 3 miles from your former home,
is your new primary job at least 53 miles from that former home? Note:
To calculate the distance, use the shortest of the more commonly
traveled routes between your (new or old) job location and your former
home. If your answer to this question is Yes… then jump to 3.
- Don't give up yet … you can still qualify if you can show that:
- A condition of employment requires you to live at your new home, or
- You will spend less time or money commuting from your new home to
your new job.
If you think that you can substantiate your reasoning, please go to
(b) for your next challenge.
- Congratulations! You have passed both timing and distance
challenges. There is one more criteria that usually no resident has
difficulty to meet:
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
However, if you start your residency late for any reason, and do not
meet the time test by the date your 1999 return is due, you can still
deduct your moving expense on your 1999 tax return. You can do this if you
expect to meet the 39-week test in 2000 or the 78-week test in 2000 or
2001. If you deduct moving expenses but do not meet the time test by 2000
or 2001, you must either:
- Report your moving expense deduction as "other income" on
your Form 1040 for the year you cannot meet the test, or
- Amend your 1999 return. (Use Form 1040X, Amended U.S. Individual
Income Tax Return, to amend your return)
On the other hand, if you do not deduct your moving expenses on your
1999 return, and you later meet the time test, you can file an amended
return for 1999 to take the deduction.
B. Deductible moving expenses
If you meet the requirements discussed earlier, you can deduct
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.
Remember that you cannot 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 make side trips for sightseeing,
the additional expenses for your side trips cannot be deducted as moving
Travel by car. If you use your car to take yourself, members of
your household, or your personal belongings to your new home, you can
figure out your expenses by deducting either:
- Your actual expenses, such as gas and oil
for your car, if you keep an accurate record of each expense, or
- 10 cents a mile.
You can deduct parking fees and tolls you pay in moving. However, you
cannot 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 does
not include a tenant or employee, unless you can claim that person as a
Moves Within or to the United States
Please note that different rules apply if you are moving outside
the United States rather than within the United States. Since the
majority of you will fall into the later situation, I will only discuss
the rules for moving within or to the United States in this article.
Form 3903. Use Form 3903 to deduct your moving expenses.
What can I deduct:
- 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.
- If you use your own car to move your things, see Travel by car, earlier.
- 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.
- You can deduct any costs of connecting or disconnecting utilities
required because you are moving your household goods, appliances, or
- 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
belongings from a place other than your former home. However, your
deduction is limited to the amount it would have cost to move them
from your former home.
- 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.
- You can include any lodging expenses you had in the area of your
former home within one day after you could not live in your former
home because your furniture had been moved.
- You can deduct expenses for only one trip to your new home for
yourself and members of your household. However, all of you do not
have to travel together.
C. Nondeductible moving expenses:
You cannot 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.
- Expenses of getting 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.
- Meal expenses.
- Mortgage penalties.
- Pre-move house-hunting expenses.
- Real estate taxes.
- Refitting of carpets and draperies.
- Security deposits (including any given up due to the move).
- Storage charges except those incurred in-transit and for foreign
- Temporary living expenses.
- Cost of moving furniture you buy on the way to your new home.
D. How to report:
Use Form 3903 to report your moving expenses. Use a separate
Form 3903 for each qualified move.
Where to deduct. Deduct your moving expenses on line 26 of Form
1040. The amount of moving expenses you can deduct is shown on line 5 of
Please note that you cannot deduct moving expenses on Form 1040EZ or
When to deduct. Generally, if you were not reimbursed, deduct your
allowable moving expenses either in the year you had them or in the year
you paid them.
Example. In December 1999, your employer transferred you to
another city in the United States, where you still work. You are single
and were not reimbursed for your moving expenses. In 1999 you paid for
moving your furniture. You deducted these expenses in 1999. In January
2000, you paid for travel to the new city. You can deduct these additional
expenses in 2000.
If you have any question regarding this article, please feel free send
me an email.