You can deduct certain expenses of moving to a new home because you changed job locations or started a new job. Thanks to the latest changes in tax laws for moving expenses, you may now get a tax break for moving expenses without having to itemize deductions. Use Form 3903to report your moving expenses if your move was within or to the United States or its possessions. 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 Form 3903. In order for expenses paid or reimbursed to qualify as moving expenses, the move must satisfy certain requirements in the law which involve work, distance and time.
Work related test –The move must be closely related in both time and place to the start of work at a new job location.
Distance test – The distance between your new principal place of work and your old residence must be at least 50 miles greater than the distance between your old principal place of work and your old residence. Your commuting distance must have increased by at least 50 miles.
Time test – In the 12-month period following the move, you must be a fulltime employee for at least 39 weeks. This test may be waived in cases of disability or death, an involuntary separation from service (other than for willful misconduct), or if you are transferred again for the benefit of your employer. 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 allowable moving expenses.
A permanent change of station includes:
1. A move from your home to the first post of active duty,
2. A move from one permanent post of duty to another, and
3. A move from your last post of duty to your home or to a nearer point in the United States. The move must occur within one year of ending your active duty or within the period allowed under the Joint Travel Regulations.
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,
• The member's, spouse's, or dependent's home of record, or
• 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.
Do not include as income the value of moving and storage services provided by the government because of a permanent change of station. If the total reimbursements or allowances you receive from the government because of the move are more than your actual moving expenses, the government should include the excess in your wages on Form W-2. However, the excessportion of a dislocation allowance, atemporary lodging allowance, atemporary lodging expense, or amove-in housing allowance is notincluded as income. Do not attach Form 3903 to your Form 1040. If your reimbursements or allowances are less than your actual moving expenses, do not include the reimbursements or allowances in income. You can deduct the expenses that exceed your reimbursements. See Deductible Moving Expenses, later.
How to Complete Form 3903 for Members of the Armed Forces.
Take the following steps.
1. Complete lines 1 and 2, using your actual expenses. Do not include any expenses for moving services provided by the government.
2. Enter on line 4 the total reimbursements and allowances you received from the government for the expenses claimed on lines 1 and 2. Do not include the value of moving services provided by the government. Also do not include any part of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance.
3. Complete line 5. If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. This is your moving expense deduction. If line 3 is equal to or less than line 4, enter zero on line 5 (you do not have a moving expense deduction). Subtract line 3 from line 4 and, if the result is more than zero, enter it on Form 1040, line 7.
If the military moves you and your spouse and dependents to or from different locations, treat these moves as a single move. Unless they exceed actual expenses, 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.
Deductible Moving Expenses
If you meet the above requirements, you can deduct the reasonable expenses of:
1. Moving your household goods and personal effects (including in-transit or foreign-move storage expenses), and
2. Traveling (including lodging but not meals) to your new home.
YOU CANNOT DEDUCT THE EXPENSES PAID BY THE GOVERNMENT. YOU CAN ONLY DEDUCT ANY EXPENSE PAID BY YOU. 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 and most direct route available. If you use your car to take yourself, members of your household, or your personal effects to your new home, you can figure your expenses by deducting either:
1. Your actual expenses, such as gas & oil for your car, if you keep an accurate record of each expense, or
2. A standard mileage rate. You can deduct parking fees and tolls you pay in moving. You cannot deduct any part of general repairs, general maintenance, insurance or depreciation for your car.
Household Goods and Personal Effects
You can deduct the cost of packing, crating and transporting your household goods and personal effects (including in transit storage within any period of 30 consecutive days and insurance expenses) from your old residence to your new residence. The costs of moving automobiles and pets are included in this category. You can also deduct any costs of connecting or disconnecting utilities required because you are moving your household goods, appliances or personal effects.
You will receive a separate W-2 Form for the DITY move. You must save this form and include this amount as income when filing your tax return. KEEPYOUR RECEIPTS so that you can take an adjustment to income on your tax return. Otherwise, you will end up paying tax on the entire amount of the DITY move pay.
State Income Taxes
Federal law provides that military personnel must pay state income tax only to the state from which they entered the military. Therefore, if you enter the military as a resident of Georgia, for example, you will always pay income tax to Georgia, not to the state where you are stationed. However, if you have a second job, you will be liable for state tax in the state where the job is located, and you may also have to pay your home state. Generally, state laws provide for credits or other procedures to prevent paying taxes to both states on the same income. Make sure that your tax preparer understands these situations. Civilian spouses of military personnel are generally assumed to be residents of the same state as the military person. They may be liable to that state for income taxes, and also liable for taxes in the state where the job is located.
Insurance and Relocation Auto Insurance
Anyone who owns a vehicle will probably need auto insurance. Upon relocation, policies may need to be updated or even purchased new from a different company. Typically, insurers require that the policy be written in the state where the vehicle is driven, garaged, and parked, so each time you move the policy may have to be changed to remain within the rules. Most states require a minimum amount of liability insurance. This is the part of the policy that covers the other involved parties if you are at fault in an accident. In many states, the amounts required as a minimum have not been adjusted in years, so they haven’t kept up with the increases in costs of medical care, repairs, new cars, and litigation. Therefore, you will probably need a policy that provides substantially more liability coverage than the state requires. At least $200,000 in liability is usually recommended. You can save some money on your policy by agreeing to a higher deductible, which is the amount that you pay out of pocket before the insurance company pays on a claim. Just be sure that you can come up with the deductible amount if you must. Also, if available in the state where you are insured pay the extra for uninsured and underinsured motorist coverage. This part of the policy, which is very inexpensive, will cover your expenses if you are in an accident, the other party is at fault, and they are uninsured.
Home insurance policies are fairly standardized, but there are a few things to consider when relocating. Typical policies do not include coverage for flood or earthquake. If moving into an area where those coverages are required or necessary, they will need to be purchased as a separate policy. You will pay extra for it, but you should consider getting a policy with “replacement cost.” In a typical policy, losses are depreciated before being covered. For example, if your ten-year old TV were stolen, the insurance company would base its payment to you on the depreciated value of a ten-year old TV. With replacement cost, the company will pay to replace the TV at current prices. It’s worth the extra cost. You may also need to pay extra to “schedule” some items, such as jewelry or collectibles. Policies usually limit coverage for some items, so if you have more than the policy will cover you must pay extra to cover them completely. If looking for a home in a new area, you may wish to investigate the cost of insurance first. Home insurance costs can vary widely based on factors such as water supply, emergency communications, and the distance to the nearest fire station. Fire departments are rated on these and many other factors and are assigned a Public Protection Classification on a scale of 1 to 10. A
“10” is assigned to areas with no fire protection, and a 1 goes to the best departments. If the departments’ ratings are different, then the cost of home insurance may also vary substantially.
Tenants have special insurance needs, regardless of the geographic location. The number one priority after moving into any rental property should be the purchase of a renter’s policy. Renter’s policies, also known as tenant policies, pay to replace your belongings if they are destroyed by a covered peril. Covered perils typically include fire, smoke, lightning, vandalism, theft, and just about anything else bad that can happen. If you don’t have such a policy, and something happens, you’re probably going to be out of luck. The landlord is not responsible for paying for your belongings, and his insurance policy only covers the building itself, not the contents. Renter’s policies are generally very reasonably priced. A typical policy to cover $20,000 worth of belongings will probably cost less than $20 per month. That’s not much to pay for protection of your furniture, clothing, electronics, and other things. Make sure that the policy does cover the most common perils, and also that it pays the replacement cost for the items lost. You may also need to purchase extra coverage for unusually expensive electronics, jewelry, or collectibles. Note that the cost will vary based on the location, building construction, number of tenants, and other factors. Another component of a typical renter’s policy is liability coverage. This covers you if a person is injured at your residence, or your actions cause damage to the property of others. The cost of defending yourself in lawsuits is also usually covered. Keep a couple of other things in mind as well. When you are living in a building occupied by 8, 10, 12, or more families, the risk of fire or other disasters is compounded. If you live in a single family home, you are solely responsible for fire safety. However, you can be the safest, most careful tenant in a building and still lose everything because of another tenant’s carelessness. And, if you are the one that starts the fire, all the other tenants may sue you. Either way, you’re sunk without a good renter’s policy. Renter’s policies typically cover loss of use, meaning that the policy will assist in paying extra living expenses incurred while your home is damaged and unfit to live in. The policy may also cover other losses, such as credit card fraud or the loss of frozen foods due to power failure. In some states, your lease may contain a clause stating that you are required to have a renter’s policy in effect throughout the lease period. If you don’t, then you are in violation of the lease, and won’t have a legal leg to stand on in case of a loss or a lawsuit against you. Without a renter’s policy, you are entrusting all your belongings and your financial well being to everyone who lives or works in your building. Are you willing to take that chance to save a few dollars a month?
Insurance rules and regulations in other countries vary greatly. Before relocating, check with the appropriate agencies to determine your needs. You may also need to purchase special policies to cover your property during shipping.
Depending on the installation, and on your rank and family size, family housing may or may not be available. Some installations actually have excess housing, and families can move in almost immediately; at other installations assignment to family housing may take a year or more. Each installation determines how many housing units will be assigned for each rank category. In some cases, assignment to family housing may be mandatory.
Guest house use is voluntary and is a service that provides short-term accommodations to military families. Confirmed reservations, which may be made up to 60 days in advance, are accorded on a first-come basis, without regard to rank, for personnel in a PCS status, visitors of hospital patients and personnel undergoing outpatient medical treatment. This entitlement is additionally extended to spouses/relatives of graduates for the nights preceding and following the soldier's graduation ceremony. Arriving PCS families may stay in guest housing for a maximum of 30 days. Departing PCS members are limited to 7 days. Twenty days is authorized for visitors of hospital patients, and 7 days for all others. Pets are not permitted in guest houses.
Family Housing Application Process
Your date of eligibility for on-post family housing is the date of departure from your last permanent duty station. If you arrive from a dependent restricted overseas tour, you will receive an eligibility date based on your departure for that tour (maximum credit, 14 months) provided you were eligible for family housing at that time. If you acquired dependents while on a dependent restricted tour, your eligibility date will be the date on which the dependents became your dependents. You have up to 30 days after arrival at your new installation to apply for housing and retain the eligibility date. Otherwise, the effective date of eligibility will be the current date of application. Your name cannot be placed on the waiting list prior to your clearing your last duty station. Criteria for determination of bedroom requirements, as outlined in AR 210-50, are:
• 1 bedroom for service member or service member & spouse
• 1 bedroom for up to 2 children: same sex until one child is 10 years old, opposite sex until one child is 6 years old
• 1 bedroom each additional child using the above criteria
Some installations have neither one-nor five-bedroom dwelling units. You may elect to be placed on a waiting list for one bedroom less than that for which you qualify. If housing is assigned under this condition, you are considered to be adequately housed and a later move to other quarters will not be approved. You may elect to be placed on a waiting list for one bedroom more than that for which you qualify under the conditions below.
a. If an impending change in the age (to occur within 24 months) of a child would change bedroom requirement.
b. If the birth of a child is expected prior to Housing assignment which would change the bedroom requirement.
c. If pending adoptions have been approved.
Requests for exceptions to family housing assignment and waiting lists policies must be justified in detail and submitted in writing through your chain of command. Requests based on medical conditions must be substantiated by the attending physician and forwarded through the Medical Commander. This includes sponsors with family members enrolled in the Exceptional Family Member Program.
When you apply for family housing, you will be told what to expect regarding notification of housing availability. Please understand that the estimated waiting times calculated by family housing are not written in stone; they are estimates and may change periodically. Once you reach the top of the waiting list, you WILL NOT be offered housing if:
a. You have less than 6 months remaining in the command.
b. You are in receipt of PCS (other than to a restricted tour), ETS or retirement orders.
c. Your family members are not going to reside with you.
d. You are divorced and do not have full custody of your children. Joint custody is acceptable if the child resides with the sponsor more than 6 months a year.
If you choose not to accept the quarters offered, your name will be removed from the waiting list and, upon request, will be placed at the bottom of the waiting list with the eligibility date being the date of placement back on the list. If you are unable to accept quarters for reasons such as a lease, you may be deferred one time for up to 90 days.
Once adequate quarters are assigned and occupied, you will not be reassigned other quarters except under exceptional circumstances. Moves of this nature must be approved in writing and will be at occupant expense.
Termination of Quarters
Quarters termination is required when the sponsor is reassigned (PCS) to another duty station, retires, or is otherwise no longer assigned to the present duty station. Quarters termination may also be directed for misconduct of the sponsor or family members. Under certain conditions a soldier's family may be authorized to reside on post after his PCS departure date. Temporary modifications made in or around quarters must be removed and unit/grounds restored to original condition unless approval to do otherwise has been obtained from the Family Housing Office. Damage to government quarters resulting from other than fair wear and tear will be restored or compensated for by the occupant. Repayment is collected by cash collection procedures or payroll deduction.
The process for applying for government quarters overseas is much the same as it is stateside, with a few exceptions. Only command sponsored families may be housed in government quarters, non-command sponsored families may, in some cases, receive assistance from the Housing Referral Office in locating off post, economy housing. Service members who receive Concurrent Travel Orders will know in advance what type of housing they are being assigned to, it will state on the orders: concurrent travel to government/or economy quarters.
Government housing overseas comes in many shapes and sizes, and may be called something other than family housing. There are three types of housing that come under the umbrella of government quarters: On-post government quarters, leased quarters, and the Government Housing Rental Program (GHRP). The first type requires no explanation. Leased quarters are housing units, subdivisions or apartment buildings that the US government has leased for an extended period of time to house US service members stationed in a foreign country. GHRP housing is generally single family housing units, either a single family home or an apartment, rented for the period of service member's tour. Leased quarters and GHRP housing may be located within a certain distance from the installation.
Off-post housing in overseas locations is called Economy Housing. The assignment to economy housing may or may not be controlled by the Family Housing Office.
Renting a Home or Apartment
While not as complex as buying a home, determining the nature of the rental market in a new city can also be difficult. If you are willing to do some research, however, many sources can help you find a good place to rent.
• Most cities have apartment finder services that can help you find something to suit your particular needs. Be aware that even if they don’t charge you a fee, they are charging the landlord or management company, which may be reflected in your rent.
• Call the housing office at your new installation to ask for their help.
• Call local universities and colleges and find out if they have compiled a list of available apartments. Not all complexes that house students are typical “student housing”; many are suitable for families as well.
• If you know someone in your destination city or have a sponsor assigned, have them send you a free rental guide (found in businesses, the housing office, or relocation assistance office) and the Sunday classified section. Ask your local library if they carry the new city’s newspaper (s).
• In addition to reading classifieds in local papers, contact property management companies. They may know about places that are available but not yet advertised. Some also specialize in particular types of housing like executive rentals. Ask if you can get on a waiting list.
• Ask questions: your sponsor or other unit personnel may know of an apartment opening up.
• Visit the city and drive around, looking for neighborhoods you like. Pay attention to “For Rent’ signs in yards; some places go so quickly they never have to advertise.
• It’s always a good idea to inquire about the distance to grocery stores, libraries, shopping centers, banks, and hospitals.
• If you are forced to rent over the phone, be sure to research the landlord or management company thoroughly. Ask them to send you floor plans and photos, if they have them.
• Call the utility provider for the location you are considering to find out the previous year’s bills. Ask how that compares to average usage cost in the city.
• Before signing a lease, contact the local law enforcement and military police to inquire about the area’s criminal activity. Some neighborhoods may look harmless in the daytime and be dangerous after sundown.
• Be sure to ask about landscaping services, security arrangements, and which amenities are up to you and which are shared by the complex. Find out which costs are included in the monthly rent or if there are additional fees. Many large complexes have pamphlets detailing all this information.
• Consider your situation carefully before you sign a lease. Is it better to pay a little more for a shorter lease so you can move again when you know the city better? Or is long term security more important?
• Be sure to go through the apartment when you first rent it to identify and document any problems so you will not be charged for them later.
• Remember that typical “military clauses” do not cover moving into family housing. Generally, these “early out” clauses only apply to a PCS move.
• Some leases require you to purchase renters insurance. Make sure you have it.