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Moving expenses to cover relocation from another country

Customer Question
I with my family moved...
I with my family moved to USA(got Green Card) from another country on March 9, 2007.

Prior to relocation I
a. sent my furniture, etc. to USA
b. arranged to relocate our pets(3 cats to USA).

Our relocation costs as well as our air-tickets were paid in our original country

On arrival to USA we lived in the hotel(hotel expenses) until 1 April, 2007. Then we rented a house.

We also rented a car for about 10 days.

We accumulated additional costs for the storage and local transportation of our furniture as it arrived well before of 1 April, 2007.

On arrival to USA I was actively looking for the job and started to work on 15 May, 2007.

I consider choosing to be taxed as US resident for full 2007 year.

Question:
My job is definitely farer than 50 miles from my original country.
Can I claim all or part of the above mentioned costs as moving/relocation expenses.
Alternatively can I claim all or part of the above mentioned costs as job hunting itemized deductions.
Submitted: 9 years ago.Category: Tax
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2/22/2008
Tax Professional: RD, Certified Public Accountant (CPA) replied 9 years ago
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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You can deduct cost of moving furniture and pets to US, you can also deduct storage costs and air tickets.

Lodging is deductible only for travel from your old home to new home. Extended stay in hotel in US will not be deductible.

See link below for what you can and what you cannot deduct-

http://www.irs.gov/publications/p521/ar02.html#d0e1353

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

 

RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Customer reply replied 9 years ago
Reply to RD's Post: Dear RD,

Thank you for the prompt response. However I need further clarifications.

As for moving expenses my concern is that IRS may challenge my intention of relocation with purpose to find a job. For example they may state that by receiving a Green Card I would relocate anyway regardless of getting the job.

As for hotel expenses and car rent I feel I may claim them as itemized job hunting deductions. The rationale that I was actively looking for the job from 09 March to 14 May. The drawback is how job hunting deductions will "co-exist" with moving expenses as well as concern for challenge of intentions from previous paragraph.

What is your opinion on these matters.
Tax Professional: RD, Certified Public Accountant (CPA) replied 9 years ago

As far as the IRS is concerned- moving expenses have to be Closely related in time. You can generally consider moving expenses incurred within 1 year from the date you first reported to work at the new location as closely related in time to the start of work. It is not necessary that you arrange to work before moving to a new location, as long as you actually go to work in that location. (extract from publication)

So if you actually worked in that location, you can support the moving deduction.

Also, job hunting expenses will be part of unreimbursed employee business deductions and they will benefit you only if you itemize and your total expenses are over 2% of your adjusted gross income.

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

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Customer reply replied 9 years ago
So if I itemize and total expenses are over 2% then would (or would not) I be able justify hotel and car rent expenses as itemized job hunting deductions?
Tax Professional: RD, Certified Public Accountant (CPA) replied 9 years ago

You cannot deduct hotel and car rent expenses for you and your family while you are looking for a job in the same area. Since this would be your tax home. You are not temporarily travelling away from this place in search of job.

See extract below of the type of job search expenses that you can claim-

Job Search Expenses

You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You cannot deduct these expenses if:

  • You are looking for a job in a new occupation,

  • There was a substantial break between the ending of your last job and your looking for a new one, or

  • You are looking for a job for the first time.

 

Employment and outplacement agency fees. You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation.

 

Employer pays you back. If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. See Recoveries in Publication 525.

 

Employer pays the employment agency. If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income.

 

Résumé. You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation.

 

Travel and transportation expenses. If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.

 

Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area.

 

You can choose to use the standard mileage rate to figure your car expenses. The rate for business use of a vehicle for 2007 is 48½ cents per mile.

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

 

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