Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abord - 2011 Page 31
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44Moving Expense Attributable to
Canadian, Israeli, and Mexican charities.
Amount allocable to excluded income. To
Foreign Earnings in 2 Years
Under the income tax treaties with Canada,
figure the amount of your moving expense that is
Mexico and Israel, you may be able to deduct
allocable to your excluded foreign earned in-
If your moving expense deduction is attributable
contributions to certain Canadian, Mexican and
come (and not deductible), you must multiply
to your foreign earnings in 2 years (the year of
Israeli charitable organizations. Generally, you
your total moving expense deduction by a frac-
the move and the following year), you should
must have income from sources in Canada,
tion. The numerator (top number) of the fraction
request an extension of time to file your return
Mexico, or Israel, and the organization must
is the total of your excluded foreign earned in-
for the year of the move until after the end of the
meet certain requirements. See Publication 597,
come and housing amounts for both years and
second year. By then, you should have all the
Information on the United States-Canada In-
the denominator (bottom number) of the fraction
information needed to properly figure the mov-
come Tax Treaty, and Publication 526, Charita-
is your total foreign earned income for both
ing expense deduction. See
Extensions
under
ble Contributions, for more information.
years.
When To File and Pay in chapter 1.
Example. On November 1, 2010, you trans-
If you do not request an extension, you
fer to Monaco. Your tax home is in Monaco, and
Moving Expenses
should figure the part of the moving expense
you are a bona fide resident of Monaco for the
that you cannot deduct because it is allocable to
entire tax year 2011. In 2010, you paid $6,000
the foreign earned income you are excluding.
for allowable moving expenses for your move
If you moved to a new home in 2011 because of
You do this by multiplying the moving expense
from the United States to Monaco. You were
your job or business, you may be able to deduct
by a fraction, the numerator (top number) of
fully reimbursed (under a nonaccountable plan)
the expenses of your move. Generally, to be
which is your excluded foreign earned income
for these expenses in the same year. The reim-
deductible, the moving expenses must have
for the year of the move, and the denominator
bursement is included in your income. Your only
been paid or incurred in connection with starting
(bottom number) of which is your total foreign
other income consists of $16,000 wages earned
work at a new job location. See Publication 521
earned income for the year of the move. Once
in 2010 after the date of your move, and $97,600
for a complete discussion of the deduction for
you know your foreign earnings and exclusion
wages earned in Monaco for 2011.
moving expenses and information about moves
for the following year, you must either:
Because you did not meet the bona fide
within the United States.
•
residence test for at least 120 days during 2010,
Adjust the moving expense deduction by
the year of the move, the moving expenses are
filing an amended return for the year of the
Foreign moves. A foreign move is a move in
for services you performed in both 2010 and the
move, or
connection with the start of work at a new job
following year, 2011. Your total foreign earned
•
location outside the United States and its pos-
Recapture any additional unallowable
income for both years is $119,600, consisting of
sessions. A foreign move does not include a
amount as income on your return for the
$16,000 wages for 2010, $97,600 wages for
move back to the United States or its posses-
following year.
2011, and $6,000 moving expense reimburse-
sions.
ment for both years.
If, after you make the final computation, you
You have no housing exclusion. The total
have an additional amount of allowable moving
Allocation of
amount you can exclude is $107,941, consisting
expense deduction, you can claim this only on
Moving Expenses
of the $92,900 full-year exclusion for 2011 and a
an amended return for the year of the move. You
$15,041 part-year exclusion for 2010 ($91,500
cannot claim it on the return for the second year.
When your new place of work is in a foreign
times the fraction of 60 qualifying bona fide resi-
country, your moving expenses are directly con-
Forms To File
dence days over 365 total days in the year). To
nected with the income earned in that foreign
find the part of your moving expenses that is not
country. If you exclude all or part of the income
deductible, multiply your $6,000 total expenses
Report your moving expenses on Form 3903.
that you earn at the new location under the
by the fraction $107,941 over $119,600. The
Report your moving expense deduction on line
foreign earned income exclusion or the foreign
result, $5,415, is your nondeductible amount.
26 of Form 1040. If you must reduce your mov-
housing exclusion, you cannot deduct the part of
ing expenses by the amount allocable to ex-
You must report the full amount of the
your moving expense that is allocable to the
cluded income (as explained later under
How To
!
moving expense reimbursement in the
excluded income.
Report
Deductions), attach a statement to your
year in which you received the reim-
Also, you cannot deduct the part of the mov-
CAUTION
return showing how you figured this amount.
bursement. In the preceding example, this year
ing expense related to the excluded income for a
was 2010. You attribute the reimbursement to
move from a foreign country to the United States
For more information about figuring moving
both 2010 and 2011 only to figure the amount of
if you receive a reimbursement that you are able
expenses, see Publication 521.
foreign earned income eligible for exclusion for
to treat as compensation for services performed
each year.
in the foreign country.
Move between foreign countries. If you
Contributions to
Year to which expense is connected. The
move between foreign countries, your moving
moving expense is connected with earning the
expense is allocable to income earned in the
Individual Retirement
income (including reimbursements, as dis-
year of the move if you qualified under either the
cussed in chapter 4 under
Reimbursement of
Arrangements
bona fide residence test or the physical pres-
moving
expenses.) either entirely in the year of
ence test for a period that includes at least 120
the move or in 2 years. It is connected with
days in the year of the move.
earning the income entirely in the year of the
Contributions to your individual retirement ar-
move if you qualify for the foreign earned income
rangements (IRAs) that are traditional IRAs or
New place of work in U.S. If your new place
exclusion under the bona fide residence test or
Roth IRAs are generally limited to the lesser of
of work is in the United States, the deductible
physical presence test for at least 120 days
$5,000 ($6,000 if 50 or older) or your compensa-
moving expenses are directly connected with
during that tax year.
tion that is includible in your gross income for the
the income earned in the United States. If you
If you do not qualify under either the bona
tax year. In determining compensation for this
treat a reimbursement from your employer as
fide residence test or the physical presence test
purpose, do not take into account amounts you
foreign earned income (see the discussion in
for at least 120 days during the year of the move,
exclude under either the foreign earned income
chapter 4), you must allocate deductible moving
the expense is connected with earning the in-
exclusion or the foreign housing exclusion. Do
expenses to foreign earned income.
come in 2 years. The moving expense is con-
not reduce your compensation by the foreign
nected with the year of the move and the
housing deduction.
following year if the move is from the United
Storage expenses. These expenses are at-
States to a foreign country. The moving expense
tributable to work you do during the year in
If you are covered by an employer retirement
is connected with the year of the move and the
which you incur the storage expenses. You can-
plan at work, your deduction for your contribu-
preceding year if the move is from a foreign
not deduct the amount allocable to excluded
tions to your traditional IRAs is generally limited
country to the United States.
income.
based on your modified adjusted gross income.
Chapter 5 Exemptions, Deductions, and Credits
Page 31
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