Dear Tax Talk,
My wife moved this year to Grenada for medical school and she will be living there for two years. We incurred a lot of moving costs (around $2,000). Can I claim this under the moving expenses on line 27 of 1040? Please advise. —
You can deduct your
moving expenses if you meet all three of the following requirements:
1. Your move is closely related to the start of work.
2. You meet the distance test.
3. You meet the time test.
Although you may meet the distance test, since the move was education related and not connected to the start of work, the moving expenses would not be deductible. If you moved with her to start a new job in Grenada, then you can claim the moving expenses as related to the start of work.
But your new job also has to meet the time test in order to qualify. The time test relates to employment in the area that you moved to. The test is different for employees and self-employed individuals.
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 (39-week test). Full-time employment depends on what is usual for your type of work in your area.
For purposes of this test, the following four rules apply:
1. You count only your full-time work as an employee, not any work you do as a self-employed person.
2. You do not have to work for the same employer for all 39 weeks.
3. You do not have to work 39 weeks in a row.
4. You must work full time within the same general commuting area for all 39 weeks
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 general area of your new job location (78-week test).
For purposes of the time test for self-employed persons, the following three rules apply.
1. You count any full-time work you do either as an employee or as a self-employed person.
2. You do not have to work for the same employer or be self-employed in the same trade or business for the 78 weeks.
3. You must work within the same general commuting area for all 78 weeks.
A student cannot be considered self-employed. Moving expenses are claimed on