On the move? Watch for deductions

You are considered to be working during any week you are temporarily absent from work because of illness, strikes, natural disasters or the like. You are also considered to be a full-time employee during any week you are absent from work for leave or for vacation that is provided in your work contract or agreement.

If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and a total of 78 weeks during the 24 months after your arrival in the area of your new job location. Whether you perform services during a given week depends on the custom of your type of work in your area.

The time test doesn't have to be met if any of the following apply:

• Your job ends because of disability.

• You are transferred for your employer's benefit.

• You are laid off or discharged for a reason other than willful misconduct.

• You died and the expenses are being claimed after your death.

Neither the distance test nor the time test has to be met if you are a member of the armed forces and your move is due to a permanent change of station.

An important point: If you are living in the United States, retire, then move and remain retired AFTER the move, you cannot deduct your moving expenses. So, if you're retired and move from, say, Chicago to Arizona, the moving expenses are not deductible.

What's deductible?

You may deduct the following expenses incurred in moving your family and dependent household members:

• The actual costs to pack, crate and move your household goods and personal effects are deductible. In one case, a Marine officer's moving expense deduction included the cost of moving his boat. You may also include the cost of storing and insuring household goods and personal effects within any period of 30 days in a row after the items were moved from your old home and before they were delivered to your new home.

• The actual costs of travel from your old home to your new home. These include transportation and lodging on the way and costs for the day you arrive. You may include expenses for only one trip per person. Expenses for personal employees such as a maid, nanny or nurse are not deductible.

If you use your own car, you may deduct either the actual out-of-pocket expenses for gas and oil or mileage. In 2009, the mileage rate is 24 cents a mile. Parking fees and tolls are added to either method.

You no longer can deduct items such as pre-move house-hunting trips, temporary living expenses and the costs associated with selling your old home as moving expenses. If an employer pays for a pre-housing hunting trip, the associated costs will be included as income to you on your W-2 form.

You deduct all of your qualified moving expenses. Any reimbursements from your employer are then subtracted to give you your net allowable deduction.

Depending on state and local taxes, as much as half of your moving costs may be paid for by Uncle Sam.

Updated June 29, 2009

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