Moving Expenses - can I deduct 2 weeks of lodging and car rental?

My husband and I moved to the UK in Aug 2009. We stayed in a hotel for two weeks while we looked for an apartment. We also rented a car for two weeks before we purchased our own.

I am filling out Form 3903 to deduct our moving expenses, and have a few questions:

1. Can our two weeks of hotel lodging be deducted?

2. Can our two weeks of car rental be deducted?

3. Can our visa fees be deducted?

We were NOT reimbursed for any of these expenses by my husband's employer.

Thanks so much if anyone can provide some advice! 

I should note that we're US citizens, resident in the UK, filing a US tax return.

My understanding is that we can deduct moving expenses if taking the Foreign Tax Credit instead of the FEIE. Am I right in thinking we CAN'T deduct moving expenses if taking the FEIE?

I wish we could deduct the moving expenses and visa stuff to get to the UK...I wasnt coming for employment so I think that I can't but if it is for employment you may have a shot since you weren't reimbursed. I am NO tax expert but I have a good US accountant haha

i'm curious about the answer to this too...i would qualify to deduct moving expenses if this is possible...

The expenses you can deduct are to get to the new location, not for you to reside in the new location.  If you incurred hotel costs while in transit, that is fine but not after you have arrived.  As a result, item 1 and 2 is not deductible.  Visa fees certainly do not fall under moving expenses, so this is an easy no.

You can certainly claim moving expenses if you file FEIE, but you have to be careful not to get a double deduction -- thus there is an adjustment that is made but it is certainly allowable to do.

  Visa fees certainly do not fall under moving expenses, so this is an easy no.

I would argue that these are deductible. They are part of the cost to relocate for work. Im a CPA FYI.

I am not sure on visa fees. Sara is usually right so she must have researched these, I have not.

Sara is quite right to you must not double dip for the moving and the foreign earned income exclusion.  This is a common mistake.

Equally if you claiming foreign tax credits, moving expenses allocated foreign on the 1116 may make zero difference to the bottom line.  This is why Sara and I - and hopefully you - use software with "what if" functions so you can run the numbers different ways...

You can deduct any amounts required for a relocation. That would include the visa. The visa's are required for the job that transfered them. Obviously, family settlement is not but I still stand that this is deductible.

You can deduct any amounts required for a relocation. That would include the visa. The visa's are required for the job that transfered them. Obviously, family settlement is not but I still stand that this is deductible.

This is not even close to what the guidance or code says about moving expenses.  From Pub 521:

If your move is to a location outside the United States and its possessions, you can deduct the following expenses.
The cost of moving household goods and personal effects from your former home to your new home.
The cost of traveling (including lodging) from your former home to your new home.
The cost of moving household goods and personal effects to and from storage.
The cost of storing household goods and personal effects while you are at the new job location.

Visa fees don't even come close to one of these categories. The cost of traveling/lodging is clearly up until the point you reach the new location, if you read the further Pub detail.

ETA: To the OP, I would suggest you read the guidance and make up your own mind.  You are the one signing your return in the end.  

Thanks for the replies!

Sara, I think the wording of the guidance is somewhat vague. Since I didn't move into my "new home" until a few weeks after I left my old one, was I still "traveling" in the meantime? This is how I originally interpreted the instructions.

After searching on the internet, however, I came across several references suggesting that lodging expenses are limited to one night in the old area, and one night in the new. This would make sense for a straightforward US move. However, I was wondering if the guidance was more "open" to interpretation when one was moving overseas (and unable to move directly into a new home).

Thanks; as always, I really appreciate your help!

Just an additional note: I'm not trying to "get away" with deducting things that aren't allowed. I truly want to do the right thing. At the same time, however, I don't want to leave money on the table for a deduction I could have taken.

Sara, I think the wording of the guidance is somewhat vague. Since I didn't move into my "new home" until a few weeks after I left my old one, was I still "traveling" in the meantime? This is how I originally interpreted the instructions.

After searching on the internet, however, I came across several references suggesting that lodging expenses are limited to one night in the old area, and one night in the new. This would make sense for a straightforward US move. However, I was wondering if the guidance was more "open" to interpretation when one was moving overseas (and unable to move directly into a new home).

You are right -1 day is the allowed travel amount for an in US move and there isn't a specific number of days for an overseas move.  How can there be really?  The time to go to rural Africa would be very different from a UK to France move.  I digress.

The rules/regulations are quite clear that you are moving to a location -- as in a city, not your final rented home 2 weeks later.  The moving element ends when you reach the location.  I can appreciate that the use of home and location interchangeably can feel vague but they do not mean your house when they say home. 

And always, the expenses must be reasonable and the guidance mentions your efforts to keep these costs to a minimum (i.e. you must go a direct route, etc.).  It isn't reasonable for the IRS to cover your rental car or your temporary housing for 2 weeks. 

Your explanation is extremely helpful, Sara. Thank you so much!

You can certainly claim moving expenses if you file FEIE, but you have to be careful not to get a double deduction -- thus there is an adjustment that is made but it is certainly allowable to do.

how exactly would one make the mistake of taking a double deduction, if you don't mind explaining?  i'm not sure i understand and want to make sure i don't make this mistake!

how exactly would one make the mistake of taking a double deduction, if you don't mind explaining?  i'm not sure i understand and want to make sure i don't make this mistake!

I will explain the theory and then suggest you let the tax software calculate it!

Basically, when you are moving for a job the moving expenses are tied to the income in that country -- which are also excludable under FEIE.  You cannot deduct twice for the same income.  

Using real numbers, say you earn $85,000 in the UK and had $5,000 in moving expenses.  Your $85,000 is completely covered by the FEIE.  In this instance, you cannot deduct the $85k and ALSO deduct the $5,000 -- as  you would be getting $90k in deductions but only $85k of income.

So essentially, assuming you are taking FEIE, the moving expenses deduction only helps if you earn over the FEIE max.  At this point, you calculate the moving expenses allowable as a fraction, so you may only get a proportion of your moving costs still.