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Chapter 27. Moving Expenses

Limit on itemized deductions. If your adjusted gross income is more than
$105,250 ($52,625 if you are married filing separately), the amount of your
itemized deductions may be limited. See Chapter 21 and the instructions for
Form 1040.

Important Reminders

Moving expenses are an itemized deduction. You can deduct moving expenses only
if you itemize your deductions on Schedule A (Form 1040). They are not subject
to the 2% of adjusted gross income limit that applies to most miscellaneous
deductions.

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).

Introduction

This chapter discusses what expenses you can deduct when you move because of a
new job. The following topics are covered:

∙  When moving expenses qualify for a deduction

∙  Which moving expenses can be claimed

∙  Dollar limits for certain expenses

∙  How to report moving expenses on Form 3903, Moving Expenses

You may be able to deduct some of your expenses for moving to a new home
because you changed job locations or started a new job. You may qualify for
the deduction whether you are self-employed or an employee. However, you must
meet the Requirements, explained later.

This chapter contains two charts that may help you determine whether your move
qualifies for a deduction, and if so, how much you can deduct. The Qualifying
Moves Within the U.S. chart covers general qualifications, and the Moving
Expense Dollar Limits chart covers how much you can deduct. Both charts are
shown later.

Moves to the United States. If you retire while living and working overseas,
you may be able to deduct your expenses of moving back to the U.S. If you are
the survivor (spouse or dependent) of a person whose main job location at the
time of death was outside the U.S., you may be able to deduct your expenses of
moving back to the U.S. See Retirees or Survivors Who Move to the U.S. under
Requirements, later.

Moves outside the United States. This chapter does not discuss moves outside
the U.S. If you are a U.S. citizen or resident alien who moved outside the
U.S. or its possessions because of your job or business, see Publication 521,
Moving Expenses, for special rules that apply to your move.

Related publications and forms.

This chapter refers to several publications and forms that you may need.
The list of forms does not include Forms 1040, 1040A, and 1040EZ. For more
information, you may want to order any of the following:

    Publication 521, Moving Expenses

    Publication 523, Tax Information on Selling Your Home

    Form 2119, Sale of Your Home

    Form 3903, Moving Expenses

    Form 3903F, Foreign Moving Expenses

    Form 8822, Change of Address

Requirements

You can deduct your moving expenses, subject to certain dollar limits, if your
move is closely related to the start of work and if you meet the distance test
and the  time test. These two tests are discussed later.

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 general, moving expenses incurred within one year
from the date you first reported to work are considered closely related in
time to the start of work at the new location. It is not necessary that you
make arrangements to work before moving to a new location, as long as you
actually do go to work.

If you do not move within one year, you ordinarily cannot deduct the expenses
unless you can show that circumstances existed that prevented the move within
that time. For example, if to allow your child to complete high school in the
same school, your family moved more than a year after you started work at the
new location, you can deduct your otherwise allowable moving expenses.

Closely related in place. A move is generally considered closely related in
place to the start of work if the distance from your new home to the new job
location is not more than the distance from your former home to the new job
location. A move that does not meet this requirement may qualify if you can
show that:

    You are required to live at your new home as a condition of employment,
    or

    You will spend less time or money commuting from your new home to your
    new job.

Home defined. Your home means your main home (residence). It may be a house,
apartment, or condominium. It also may be a houseboat, house trailer, or
similar dwelling. Your home does not include other homes owned or kept up by
you or members of your family. It also does not 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.

Distance Test

Your move will meet the distance test if your new main job location is at
least 35 miles farther from your former home than your old main job location
was. For example, if your old job was 3 miles from your former home, your new
job must be at least 38 miles from that former home.

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 does not apply to the location of your new
home.

Example. You moved to a new home less than 35 miles from your former home
because you changed job locations. Your old job was 3 miles from your former
home. Your new job is 40 miles from that home. Because your new job is 37
miles farther from your former home than the distance from your former home
to your old job, you meet the 35-mile distance test.

First job or return to full-time work. If you go to work full time for
the first time, or go back to full-time work after a substantial period
of part-time work or of unemployment, your place of work must be at least
35 miles from your former home to meet the distance test.

Exception for Armed Forces. If you are in the Armed Forces and you moved
because of a permanent change of station, you do not 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. A new job location is a new place where you will
work permanently or indefinitely rather than temporarily. 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-for example, where you report for work or
are otherwise required to "base" your work.

Union members. If you work for a number of 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 the money you earn at each place.

Time Test

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

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. You do not have to work for the same employer
for the 39 weeks. However, you must work full time within the same general
commuting area. You do not have to work 39 weeks in a row. Whether you are
employed full time depends on what is usual for your type of work in your
area.

Temporary absence from work. You are considered to be working 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 be a full-time employee during any week you are absent from work
for leave or vacation that is 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 and that period is 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 a full-time employee for 12 months.

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 area of
your new job location. You do not have to be self-employed in the same trade
or business for the 78 weeks.

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.

Full-time work. Whether you perform services full time during any week depends
on what is usual for your type of work in your area.

If you are an employee and become self-employed before satisfying the 39-week
test for employees, you meet the time test if you satisfy the 78-week test
for self-employed persons. Under the 78-week test, you still have to work full
time for 39 weeks during the first 12 months, either as an employee or as a
self-employed person.

If you are self-employed and become an employee before satisfying the 78-week
test, you can use the time spent as a full-time employee to satisfy the
78-week test if you cannot satisfy the 39-week test for employees. Under the
78-week test, you still have to work full time for 39 weeks during the first
12 months, either as an employee or as a self-employed person.

If you are both self-employed and an employee, the amount of time you spend
as each determines whether you must meet the 78-week test for self-employed
persons or the 39-week test for employees. If you spend most of your working
time as a self-employed person, you must meet the 78-week test (which includes
a 39-week test). If you spend most of your working time as an employee, you
must meet the 39-week test.

For more information, see Time test for self-employed persons in Publication
521.

Joint return. If you are married and file a joint return and both you and your
spouse work full time, either of you can satisfy the full-time work test.
However, you cannot combine the weeks your spouse worked with the weeks you
worked to satisfy that test.

Time test not met. You can deduct your moving expenses even if you have not
met the time test by the date your 1992 return is due. You can do this if you
expect to meet the 39-week test in 1993 or the 78-week test in 1994. If you
deduct moving expenses but do not meet the time test by then, you must either
amend your 1992 return or report your moving expense deduction as other income
on your Form 1040 for the year you cannot meet the test. Use Form 1040X,
Amended U.S. Individual Income Tax Return, to amend your return.

If you do not deduct your moving expenses on your 1992 return, and you later
meet the time test, you can file an amended return for 1992 to take the
deduction.

Home-selling expenses. If your moving expenses become nondeductible because
you did not meet the time test, you can use the part of these expenses that is
for the sale or exchange of your former home to lower the gain on the sale of
your former home. The part of these expenses that is for the purchase of your
new home can be added to the basis of your new home. For more information on
basis, see Basis in Chapter 16.

Exceptions to the Time Test

You do not have to meet the time test if one of the following applies:

1)  You are in the Armed Forces and you moved because of a permanent change
    of station-see Members of the Armed Forces, later,

2)  You moved to the United States because you retired-see Retirees or
    Survivors Who Move to the U.S., later,

3)  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 U.S., later,

4)  Your job at the new location ends because of death or disability, or

5)  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.


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 do not have to meet the distance and time
tests, discussed earlier. You can deduct your unreimbursed moving expenses,
subject to certain dollar limits, which are discussed later.

A permanent change of station includes:

∙  A move from your home to the area of your first post of duty when you
   begin active duty,

∙  A move from your last post of duty to your home or to a nearer point in
   the United States, if you move within one year of ending your active duty
   or within the period allowed under the Joint Travel Regulations, or

∙  A move from one permanent post of duty to another.

Spouse and dependents. If a member of the Armed Forces deserts, is imprisoned,
or dies, a permanent change of station for the spouse or dependent includes a
move to the place of enlistment, or to the member's, spouse's, or dependent's
home of record, or to a nearer point in the United States.

If the military moves you and 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. Do not include in income
the value of moving and storage services provided by the government in
connection with a permanent change of station. However, if you receive
reimbursements or allowances from the government that are more than your
actual moving expenses, include the excess in income.

If your reimbursements or allowances are less than your actual moving
expenses, do not include the reimbursements or allowances in income. You may
deduct the excess expenses, subject to the dollar limits discussed later, if
the expenses meet the other requirements discussed under Deductible Moving
Expenses.

Note. You must apply the dollar limits to all expenses other than services
provided in kind by the government.

If you are required to relocate and your spouse and dependents move to or from
a different location, do not include in income reimbursements, allowances, or
the value of moving and storage services provided by the government to move
you, your spouse, and your dependents to and from the separate locations.

Do not deduct any expenses for moving services that were provided by the
government, or that were reimbursed to you and you did not include in income.

Retirees or Survivors Who Move to the U.S.

You may be able to deduct your moving expenses, subject to certain dollar
limits, if you move to the U.S. or to a possession of the U.S. You do not have
to meet the  time test, discussed earlier, but you must meet the requirements
discussed below.

Retirees. You can deduct moving expenses for a move to a new home in the U.S.
when you permanently retire, if both your former main job location and your
former home were outside the U.S.

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
will be determined by your age and health, the customary retirement age for
people who do similar work, whether you are receiving retirement payments from
a pension or retirement fund, and the length of time before your return to
full-time work.

Survivors. You can deduct moving expenses for a move to a home in the U.S. if
you are the spouse or the dependent of a person whose main job location at the
time of death was outside the U.S. The move must begin within 6 months after
the decedent's death. It must be from the decedent's former home outside the
U.S. That home must also have been your home.

A move begins when:

∙  You contract for your household goods and personal effects to be moved to
   your home in the U.S. The move must be completed within a reasonable
   time,

∙  Your household goods and personal effects are packed and on the way to
   your home in the U.S., or

∙  You leave your former home to travel to your new home in the U.S.

Deductible Moving Expenses

If you meet the Requirements discussed earlier, you can deduct the reasonable
expenses of:

    Moving your household goods and personal effects (including certain
    storage expenses),

    Traveling to your new home,

    Househunting trips before you move,

    Living temporarily in the new area,

    Selling your former home and buying a new one, and

    Settling an old lease and signing a new lease.

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 are not deductible as moving expenses.

Travel by car. If you use your car for househunting or to take yourself,
members of your household, or your belongings to your new home, you can figure
your expenses by deducting either:

1)  Your actual expenses, such as gas and oil for your car, if you keep an
    accurate record of each expense, or

2)  9 cents a mile.

You can deduct parking fees and tolls you paid in moving. You cannot deduct
any part of general repairs, general maintenance, insurance, or depreciation
for your car.

Member of 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 dependent.

Location of move. There are different rules for moving within or to the U.S.
than for moving outside the U.S. This chapter only discusses moves within or
to the U.S. The rules for moves outside the U.S. can be found in Publication
521.

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 one. 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 consecutive 30-day period
after the day your things are moved from your former home and before they
are delivered to your new one.

You can deduct any costs of connecting or disconnecting utilities in order to
move your household goods, appliances or personal effects.

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

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

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

Travel Expenses

You can deduct the cost of transportation, meals (see Meal Expenses, later),
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 meal and 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. If you use your own car, see Travel by
car, earlier.

Meal Expenses

You can deduct only 80% of the cost of meals (food and beverages) you incur
during your househunting trip, while traveling to your new residence, and
while staying in temporary quarters. The limit applies to your meal expenses
whether or not you are reimbursed by your employer. This limit applies before
all other moving expense limits.

If you are self-employed, you are also subject to the 80% limit on meals.

Lavish or extravagant meals. You cannot deduct the cost of meals (food and
beverages for you and your family) that you incur during your move that
are lavish or extravagant under the circumstances.

Pre-Move Househunting Expenses

You must have a job in the new area before you can deduct the cost of trips
that you take primarily to look for a new place to live. You can deduct
househunting expenses, which include the cost of transportation, meals
(see Meal Expenses, earlier), and lodging for yourself and members of your
household while traveling to and from the area of your new job and while you
are there. Your househunting does not have to be successful to qualify for
this deduction. You and members of your household can travel separately. There
is no limit to the number of trips you or members of your household can take.
However, see Dollar Limits, later. If you use your own car, see Travel by car,
earlier.

If you are self-employed, see Self-employed, under Temporary Living Expenses,
next.

Temporary Living Expenses

Temporary living expenses include only the costs of meals (see Meal Expenses,
earlier) and lodging while occupying temporary quarters in the area of your
new job. You can deduct these costs, subject to the Dollar Limits, discussed
later, for any consecutive 30-day period after you get the job, but before
you move into permanent quarters.

Self-employed. If you are self-employed, do not deduct your expenses for
pre-move househunting trips or temporary living expenses unless you have made
substantial arrangements to begin work at the new location. See Self-employed
under Deductible Moving Expenses in Publication 521 for more information.

Home-Related Expenses

You can deduct the reasonable expenses of disposing of your former home and
getting a new one.

Home sale expenses. When you sell your former home, the following qualify as
moving expenses:

    Real estate commissions,

    Attorneys' fees,

    Title fees,

    Escrow fees,

    "Points" or loan placement charges you are required to pay,

    State transfer taxes, and

    Similar expenses connected with the sale or exchange of your former home.

You cannot deduct as a moving expense the cost of physical improvements
intended to improve the condition or appearance of your former home.

Home purchase expenses. When you buy your new home, the following qualify as
moving expenses:

    Attorneys' fees,

    Escrow fees,

    Appraisal fees,

    Title fees,

    "Points" or loan placement charges not representing payment or prepayment
    of interest, and

    Similar expenses connected with the purchase of your new home.

You can deduct these purchase-related expenses as moving expenses or you can
add them to the basis of your new home, which will reduce the amount of gain
you realize when you sell it. However, "points" or loan placement charges not
representing interest generally cannot be added to the basis of your new home.

No double benefit. The expenses of selling your former home that you include
as part of your moving expense deduction cannot be used to reduce the amount
realized on the sale of your former home. The expenses of buying your new
home that are included in your moving expense deduction cannot be added to the
basis of your new home. See Chapter 16 for information on selling and buying
your home.

Unexpired lease expenses. When you end an unexpired lease on your former home,
you can deduct, subject to the dollar limits, the following expenses:

    Payments to the lessor for releasing you from the lease,

    Attorneys' fees,

    Real estate commissions, and

    Expenses, such as the difference between the rent you pay and the rent
    you receive from an assignee or sublessee.

Expenses of leasing a new home. When you lease a new home, you can deduct,
subject to the dollar limits, the following expenses:

    Fees, and

    Commissions.

These expenses can be for leasing, subleasing, or taking an assignment of
a lease. You cannot deduct payments or prepayments of rent. See Security
deposit, later.

Dollar Limits

The expenses of moving household goods and traveling to your new home are
not limited to any amount. However, the combined total of all your other
moving expenses, including expenses of selling and buying your home and lease
expenses, cannot be more than $3,000. Of the $3,000 limit, no more than $1,500
can be deducted for househunting trip expenses and temporary living expenses
combined. Exceptions are explained later under Married persons filing
separate returns and Married persons filing a joint return.

Homeowners. If you are a homeowner, you should claim househunting trip expenses
and temporary living expenses, up to $1,500, before you claim the expenses
of selling and buying your home. Within the dollar limits, you can choose to
deduct any combination of these expenses. Any expenses for selling your home
that you cannot deduct because of the $3,000 limit should be used to reduce
the gain on the sale of your former home. Use any expenses for buying your
home that you cannot deduct because of the limit (except "points" as noted
earlier) to increase the basis of your new home.

Married persons filing separate returns. If both of you began work at new job
locations and lived together, the dollar limit is $1,500 for each of you. No
more than $750 for each of you can be deducted for househunting and temporary
living expenses.

If only one of you began work at a new job location, the limit for that person
is $3,000. No more than $1,500 can be deducted for househunting and temporary
living expenses.

If both of you began work at new job locations, but you have not shared the
same new home by the end of the tax year or made plans to do so, the limit for
each of you is $3,000. No more than $1,500 for each of you can be deducted for
househunting and temporary living expenses.

Example. Tim and Mary Brown are married, but separated. Tim moved from New
York to Michigan. His moving expenses were $3,600 for househunting trips,
temporary living expenses, and selling his home. Mary moved from New York
to Washington, DC. Her moving expenses were $3,200 for househunting trips,
temporary living expenses, and selling her home. Neither had more than $1,500
in expenses for househunting trips and temporary living expenses. Each can
claim $3,000 on a separate return.

Married persons filing a joint return. If both of you began work at new job
locations, but at the end of the tax year have not shared the same new home or
made plans to do so, your combined limit is $6,000. No more than $3,000 can be
deducted for your combined househunting and temporary living expenses. However,
of the $6,000 and $3,000 limits, each of you is limited to $3,000 and to
$1,500 for househunting and temporary living expenses.

If you shared the same new home, your combined limit is $3,000, of which no
more than $1,500 can be deducted for househunting and temporary living
expenses.

Nondeductible Expenses

You cannot deduct the following items as moving expenses:

    Home improvements to help sell your home,

    Loss on the sale of your home,

    Mortgage penalties,

    Losses from disposing of memberships in clubs,

    Any part of the purchase price of your new home,

    Real estate taxes,

    Car tags,

    Driver's license,

    Refitting carpets and draperies, and

    Storage charges except those incurred in transit and for foreign moves.

Security deposit. Do not deduct a security deposit you paid when you signed a
new lease. Do not deduct a security deposit that you gave up because the
vacated space needed cleaning or redecorating when you ended the lease.
However, you can deduct a security deposit that you gave up if you broke the
lease as a result of the move.

Temporary employment. You cannot take a moving expense deduction and a
business expense deduction for the same expenses. You must determine 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 are deductible as
business expenses if you are considered away from home on business. Your
work is considered temporary if its end can be foreseen within a reasonably
short time and your main job location or post of duty does not change. See
Temporary Assignment or Job in Chapter 28 for information on deducting your
expenses.

How to Report

The following discussions explain how to report your moving expenses and any
reimbursements or allowances you received for your move.

Form 3903. Use Form 3903, Moving Expenses, to report your moving expenses if
your move was within or to the United States or its possessions.

Where to deduct. Deduct your moving expenses on Schedule A (Form 1040). You
must be able to itemize your deductions to claim the moving expense deduction.
The amount of moving expenses you can deduct, subject to the limit on itemized
deductions, is shown on line 19, Form 3903. Enter this amount on line 18,
Schedule A (Form 1040).

Reimbursements. Include all reimbursements of, or payments for, moving
expenses in gross income for the year you receive them. If your employer paid
for any part of your move, report that amount as income on line 7, Form 1040.

Your employer must give you an itemized list of payments, reimbursements,
or allowances that have been paid to you for moving expenses. Form 4782,
Employee Moving Expense Information, may be used for this purpose. See
Publication 521 for a filled-in Form 4782.

Your employer must include the amounts shown on Form 4782 in Box 10, Wages,
tips, other compensation, on your Form W─2, Wage and Tax Statement. A separate
Form W─2 may be provided.

Moving services provided or paid for by your employer. Include in your income
the value of moving services provided by your employer to you or to members
of your family. For example, if your employer moves your household goods using
the employer's own truck, you are considered as having received payment equal
to the value of the transportation service. You include this amount in income
in the year you receive the service.

If your employer pays someone else, such as a moving company, to move your
goods, you must include in your income the amount paid to the moving company
in the year your employer pays them for their service.

Your employer must include the value of all moving expense reimbursements,
services, and payments, in the total income on your Form W─2.

Uniform Relocation Assistance and Real Property Acquisition Policies Act of
1970. Do not include in income any moving expense payments 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. Your employer is not required to withhold income tax, social
security tax, or Medicare tax on allowances or reimbursements for moving
expenses if your employer reasonably believes that you will be able to
deduct the expenses. This means that at the time your employer pays you the
reimbursement or allowance, your employer reasonably believes that you will
meet the distance and time tests, and that your expenses will be deductible.

For more information on tax withholding, see Publication 521.

When to deduct. Deduct your moving expenses in the year you had them or
paid them. If you use the cash method of accounting, which is used by most
individuals who are not self-employed, you can choose to deduct moving
expenses in the year you are reimbursed by your employer 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 can choose to deduct moving expenses in the year
that you received reimbursement by taking the deduction on your return, or
amended return, for that year.

Example 1. In December 1991, your employer transferred you to another city,
where you still work. You are single and were not reimbursed for your moving
expenses. In 1991 you paid for a househunting trip, travel to the new city,
temporary living expenses, and moving your furniture. You itemized your
deductions and deducted these expenses in 1991. In 1992 you paid additional
temporary living expenses and certain deductible expenses of selling your
home and buying a new one. You deduct these expenses in 1992 if you itemize
deductions on Schedule A (Form 1040).

Some of your moving expenses are subject to the Dollar Limits, discussed
earlier. You apply the 80% limit on your meal expenses before you apply the
$1,500 moving expense limit on househunting and temporary quarters.

The dollar limits are not separately applied to the expenses you deduct each
year; they apply to the total expenses for that move. You must show on your
1992 Form 3903 the amounts you deducted on your 1991 Form 3903 that were
subject to the dollar limits. If you deducted $1,000 in 1991 for househunting
and temporary living expenses, you can deduct up to $500 for these expenses
in 1992.

In 1991, you deducted $1,000 for househunting and temporary living expenses.
In 1992, you incurred $800 for temporary living expenses ($600 for lodging
and $200 for meals), $3,500 to sell your old home, and $500 to buy a new home.
Your deduction for temporary living expenses in 1992 is limited to $500. This
is the lesser of $500 ($1,500 limit minus the $1,000 you deducted in 1991) or
$760 ($600 lodging plus $160 (80% of your $200 meal expense)).

Your total moving expense deduction in 1992 is limited to $2,000. This is
the amount of your househunting, temporary living, and qualified real estate
expenses ($4,500), subject to the $3,000 limit, minus the deduction you took
in 1991 ($1,000) that was subject to the same limit.

You must show your 1991 deduction on your 1992 Form 3903 by writing "$1,000
deducted in 1991" above lines 16 and 18.

Example 2. In December 1991, your employer transferred you to another city,
where you still work. You paid for all of your moving expenses in 1991.
Your employer fully reimbursed you in 1992 for your moving expenses. This
reimbursement is included in your 1992 Form W─2. If you itemize deductions,
you can deduct your allowable moving expenses in 1991, the year you paid them,
or you can deduct them in 1992, the year of reimbursement. In either case,
your total deduction is the same unless it is subject to the limit on itemized
deductions in one or both years.

Example 3. In December 1992, your employer transferred you to another city,
where you still work. You started your move in 1992 and finished it in 1993.
Your employer paid you a flat amount in December 1992 to move. This amount was
included in your 1992 Form W─2. You paid your 1993 expenses by the due date
for filing your 1992 return. If you itemize deductions, you can deduct your
1992 moving expenses on your return for 1992 and your 1993 moving expenses on
your return for 1993 Or, you can deduct all your allowable moving expenses on
your return for 1992. In either case, your total deduction is the same unless
it is subject to the limit on itemized deductions in one or both years.