Moving expenses

[oceanlovin'ea]

I have a client that is moving a couple of hundred miles away. She was working full time till June. Now she is working part time as a tutor (self employed) and going back to school.

I checked to see if she could take moving expenses. It says taxpayer must work full time for 39 weeks out of the first year or for self employed the time test is 39 weeks in the first 12 months or 78 weeks in the first 24 months.

If I am reading this correctly a self employed person doesn't have to work full time. Is that correct? What if the job she gets when she moves is for a company that will pay her with W-2? At this point, we don't know where she will be working. She could still be self employed or an employee.

Linda, EA

[BP.]

It says taxpayer must work full time for 39 weeks out of the first year or for self employed the time test is 39 weeks in the first 12 months or 78 weeks in the first 24 months.

If I am reading this correctly a self employed person doesn't have to work full time. Is that correct?

http://www.irs.gov/pub/irs-pdf/f3903.pdf

Not sure if this is what you mean, but the form instructions do include the specific language "full time" when discussing the time test for self employed people.

What if ...?

Instructions address that.

[oceanlovin'ea]

Thanks

I see the instructions do say that. I was reading from the TaxBook page 3-5 and in the sentence for self-employed it doesn't have the words "full-time"

I will let her know that she doesn't get to take moving expenses.

Linda, EA

[New York Enrolled Agent]

I see the instructions do say that. I was reading from the TaxBook page 3-5 and in the sentence for self-employed it doesn't have the words "full-time"

I will let her know that she doesn't get to take moving expenses.

You can also use the income tax regulations for your authority.

Reg. §1.217-2(c)(4)(iv)
(iv) Only those weeks during which the taxpayer is a full-time employee or during which he performs services as a self-employed individual on a full-time basis qualify as a week of work for purposes of the minimum period of employment condition of section 217(c)(2).

[appelman]

Also, just for the record...

It's 39 weeks out of 12 months AND 78 weeks out of 24 months (not OR).

[FEDUKE404]

Situation does not justify 3903

While there are often some gray zones on moving expenses (somewhat akin to "how lucky do you feel?"), this situation does seem to be on very thin ice for claiming any such.

A part-time self-employed person (tutor!) who is going back to school....... Hmmm....

If tax logic is ever possible, the underlying concept for deducting moving expenses is more or less related to necessary expenses to continue employment. Hence the IRS rules/restrictions. The full-time/part-time employment rules further narrow the field.

I think Sandy's conclusion is correct.

FE

[oceanlovin'ea]

I agree....she gets no moving expenses. The primary reason for the moving is not for employment. But she will have to work when she moves. But no deduction for moving expenses for her.

Linda, EA

[Gary2]

I agree....she gets no moving expenses. The primary reason for the moving is not for employment. But she will have to work when she moves. But no deduction for moving expenses for her.

Unlike deducting travel expenses, the primary reason for the move isn't the essential question. So, for example, if a married couple moves because one of them has enrolled in graduate school (the primary reason), but the other spouse continues to work full time at the new location, then they can still qualify.

In this case, it sounds like she hasn't moved yet. If so, then the correct answer is "Probably not given the current plans, but keep all the records of the move just in case you change your mind and start working a full time job soon after the move."

[BP.]

The primary reason for the moving is not for employment.

That's not really the determining test- "primary reason." Instructions only require move and new workplace be "closely related" subject to time and distance tests.

[oceanlovin'ea]

Since she is going to school full time to get masters degree and has a boyfriend that is probably going to be paying living expenses, she will only work part time. Full time work is at least a year or two away for her.

I thought about the moving expenses and really didn't think she could deduct them but I just wanted to have second opinion. Thanks guys (and girls)

Linda, EA