Understanding the 3903 Form and How You Can Get Tax Breaks for Moving

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Moving Tax Breaks

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When you're filling out your tax forms a year after you move, you may be entitled to certain tax benefits. If you moved because of your job, then you may receive some tax deductions through the 3903 form.

Deducting your moving expenses

Before you begin filling it out, remember that the 3903 tax form can only be completed one year after you move. To fully determine if you will receive a tax deduction, you also have to pass two tests – the distance and time test.

The distance test. Keep 50 miles as your target number as you do your distance calculation. Take the distance between last year's home and job, and then subtract it from the distance between last year's home and your new job. The difference must be greater than 50 miles to pass the test.
Ex. In February 2007, the distance between Sam's house and job was 56 miles. Sam moves to a new place to be closer to his job in the same month and year.

In March 2008, twelve months after Sam moved, he is sitting down to do his taxes and comes across the 3903 form. The 3903 form asks for two calculations, so will he past the distance test? Let's see.

The distance between last year's home - last year's job = 56 miles
The distance between last year's home – current job = 5 miles

Total = 51 miles (Sam passed the distance test!)

The time test. Keep 39 weeks as your target number as you do your time calculation. You must have worked at least 39 weeks at your new job during the 12 months after your move.

If you pass both tests, then you should be able to deduct your moving expenses from your taxable income. The formulas for calculating time and distance are located at the bottom of the 3903 form. Special rules will apply for individuals who are self-employed, retirees and survivors, and members of the Armed Forces.

Filling Out the Form

Lines 1 and 2 should be filled in with transportation, storage, and travel costs. Next, add lines 1 and 2 and enter this sum into line 3. If your employer paid you any money for your moving expenses that are not part of your W-2 form, then enter this amount on line 4. Subtract line 4 from line 3 and the resulting number is your moving expense deduction.

TIP: The mailing address for sending your tax return will vary by state, so make sure to check the IRS website for specific mailing instructions.

The following items qualify as moving expenses:
  • Lodging expenses (meals not included)
  • Storage and insurance for household items that you are moving
  • Packing and moving costs related to your household items
The 3903 form should be submitted to the IRS along with your 1040 tax return. Knowing how to fill out the form before your taxes are due can also give you time to consult with your tax advisor or contact the IRS with any questions.

Author :

on August 27, 2009

Movers.com - Moving Expert
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