The cost of your meals is not a deductible moving expense.

The costs of moving household goods include the reasonable expenses of moving household goods and personal effects to and from storage. For a foreign move, the costs also include expenses of storing the goods and effects for part or all of the period that your new job location abroad continues to be your main job location.

Expenses must be reasonable.   You can deduct only those expenses that are reasonable for the circumstances of your move. For example, the costs of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation.

Members of your household.   A member of your household includes anyone who has both your former home and new home as his or her home. It does not include a tenant or employee unless you can claim that person as a dependent.

Retirees.   You can deduct the costs of moving to the United States when you permanently retire if both your former main job location and former home were outside the United States and its possessions. You do not have to meet the time test described earlier.

Survivors.   You can deduct moving expenses for a move to the United States if you are the spouse or dependent of a person whose main job location at the time of death was outside the United States and its possessions. The move must begin within 6 months after the decedent's death. It must be from the decedent's former home outside the United States, and that home must also have been your home. You do not have to meet the time test described earlier.

How to report moving expenses.    Use Form 3903 to report your moving expenses and figure your allowable deduction. Claim the deduction as an adjustment to income on Form 1040. (You cannot deduct moving expenses on Form 1040A or Form 1040EZ.)

Reimbursements.   Except for the tax-free foreign areas allowances described earlier under Allowances, Differentials, and Other Special Pay, you must include all reimbursements of, or payments for, nondeductible moving expenses in gross income for the year paid. You must also include in gross income all reimbursements paid to you under a nonaccountable plan. Your employer should include these amounts in your wages on your Form W-2.

Additional information.   For additional information about moving expenses, see Publication 521.

Other Itemized Deductions

You may be able to claim other itemized deductions not connected to your employment.

Contributions.   You can deduct contributions to qualified organizations created or organized in or under the laws of the United States or its possessions. You cannot deduct contributions you make directly to foreign organizations (except for certain Canadian, Israeli, and Mexican charities), churches, and governments. For more information, see Publication 526, Charitable Contributions.

Real estate tax and home mortgage interest.   If you receive a tax-free housing allowance, your itemized deductions for real estate taxes and home mortgage interest are limited. You must reduce the amount of each deduction that would otherwise be allowable by the amount of each expense that is related to the tax-free allowance.

Required statement.   If you receive a tax-free housing allowance and have real estate tax or home mortgage interest expenses, attach a statement to your tax return. The statement must contain all of the following information.

1. A list of each class of taxable income by class plus the amount.
2. A list of each item of tax-free housing allowance income plus the amount.
3. A list of each item of otherwise deductible expense plus the amount.
4. An explanation of how you figured the nondeductible part of your otherwise allowable expenses.
5. A statement that the other expenses on your tax return are not related to tax-free income.

Example.   Adam is an IRS employee working overseas who receives a $6,300 tax-free housing and utility allowance. During the year, Adam used the allowance, with other funds, to provide a home for himself. His expenses for this home totaled $8,400 and consisted of mortgage principal ($500), insurance ($400), real estate taxes ($1,400), mortgage interest ($4,000), and utility costs ($2,100). Adam did not have any other expenses related to providing a home for himself.

Adam must reduce his deductions for home mortgage interest and real estate taxes. He figures a reasonable way to reduce them is to multiply them by a fraction: its numerator is $6,300 (the total housing and utility allowance) and its denominator is $8,400 (the total of all payments to which the housing and utility allowance applies). The result is ¾. Adam reduces his otherwise allowable home mortgage interest deduction by $3,000 (the $4,000 he paid × ¾) and his otherwise allowable real estate tax deduction by $1,050 (the $1,400 he paid × 3/4). He can deduct $1,000 of his mortgage interest ($4,000 - $3,000) and $350 of his real estate taxes ($1,400 - $1,050) when he itemizes his deductions.

Exception to the reduction.   If you receive a tax-free housing allowance as a member of the military or the clergy, this reduction does not apply. This means you can deduct all the real estate tax and home mortgage interest expenses you are otherwise entitled to deduct.

Foreign Taxes

If you pay or accrue taxes to a foreign government, you generally can choose to either claim them as a credit against your U.S. income tax liability or deduct them as an itemized deduction when figuring your taxable income.

Do not include the foreign taxes paid or accrued as withheld income taxes in the Payments section of Form 1040.

Foreign tax credit.   Your foreign tax credit is subject to a limit based on your taxable income from foreign sources. If you choose to figure a credit against your U.S. tax liability for the foreign taxes, you must generally complete Form 1116 and attach it to your U.S. income tax return.

You cannot claim a credit for foreign taxes paid on amounts excluded from gross income under the foreign earned income or housing exclusions. If all your foreign income is exempt from U.S. tax, you will not be able to claim a foreign tax credit.

If the foreign taxes you paid or incurred during the year exceed the limit on your credit for the current year, you can carry back the unused foreign taxes as credits to the 2 preceding years and then carry forward any remaining unused foreign taxes to the 5 succeeding tax years.

Exemption from limit.   You can elect to not be subject to the foreign tax limit if you meet all the following conditions.

1. Your only foreign income is passive income, such as interest, dividends, and royalties.
2. The total of all your foreign taxes is not more than $300 ($600 for joint tax returns).
3. The foreign income and taxes are reported to you on a payee statement, such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income.

If you make the election, you can claim a foreign tax credit without filing Form 1116. However, you cannot carry back or carry over any unused foreign tax to or from this year. See the instructions for the appropriate line in the Tax and Credits section of Form 1040.

Foreign tax deduction.   If you choose to deduct all foreign income taxes on your U.S. income tax return, itemize the deduction on Schedule A (Form 1040). You cannot deduct foreign taxes paid on income you exclude under the foreign earned income or housing exclusions.

Example.   Dennis and Christina are married and live and work in Country X. Dennis works for the U.S. Government and Christina is employed by a private company. They pay income tax to Country X on Christina's income only.

Dennis and Christina file a joint tax return and exclude all of Christina's income. They cannot claim a foreign tax credit or take a deduction for the taxes paid to Country X.

Deduction for other foreign taxes.   The deduction for foreign taxes other than foreign income taxes is not related to the foreign tax credit. You can take deductions for these miscellaneous foreign taxes and also claim the foreign tax credit for income taxes paid to a foreign country.

You can deduct real property taxes you pay that are imposed on you by a foreign country. You take this deduction on Schedule A (Form 1040). You cannot deduct other foreign taxes, such as personal property taxes, unless you incurred the expenses in a trade or business or in the production of income.

More information.   The foreign tax credit and deduction, their limits, and carryback and carryover provisions are discussed in detail in Publication 514.

How To Get Tax Help

You can order free publications and forms, ask tax questions, and get more information from the IRS in several ways. By selecting the method that is best for you, you will have quick and easy access to tax help. Access to most of these services depends on whether you are inside or outside the United States.

Services Available Inside the United States

You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways.

Contacting your Taxpayer Advocate.   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate.

The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review.

To contact your Taxpayer Advocate:

• Call the Taxpayer Advocate at 1-877-777-4778.
• Call the IRS at 1-800-829-1040.
• Call, write, or fax the Taxpayer Advocate office in your area.
• Call 1-800-829-4059 if you are a TTY/TDD user.

For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS.

Free tax services.   To find out what services are available, get Publication 910, Guide to Free Tax Services. It contains a list of free tax publications and an index of tax topics. It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics.

Personal computer. With your personal computer and modem, you can access the IRS on the Internet at www.irs.gov. While visiting our web site, you can select:

• Frequently Asked Tax Questions (located under Taxpayer Help & Ed) to find answers to questions you may have.
• Forms & Pubs to download forms and publications or search for forms and publications by topic or keyword.
• Fill-in Forms (located under Forms & Pubs) to enter information while the form is displayed and then print the completed form.
• Tax Info For You to view Internal Revenue Bulletins published in the last few years.
• Tax Regs in English to search regulations and the Internal Revenue Code (under United States Code (USC)).
• Digital Dispatch and IRS Local News Net (both located under Tax Info For Business) to receive our electronic newsletters on hot tax issues and news.
• Small Business Corner (located under Tax Info For Business) to get information on starting and operating a small business.

You can also reach us with your computer using File Transfer Protocol at ftp.irs.gov.

TaxFax Service. Using the phone attached to your fax machine, you can receive forms and instructions by calling 703-368-9694. Follow the directions from the prompts. When you order forms, enter the catalog number for the form you need. The items you request will be faxed to you.

Phone. Many services are available by phone.
 

• Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current and prior year forms, instructions, and publications.
• Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
• TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829- 4059 to ask tax questions or to order forms and publications.
• TeleTax topics. Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics.

Evaluating the quality of our telephone services. To ensure that IRS representatives give accurate, courteous, and professional answers, we evaluate the quality of our telephone services in several ways.

• A second IRS representative sometimes monitors live telephone calls. That person only evaluates the IRS assistor and does not keep a record of any taxpayer's name or tax identification number.
• We sometimes record telephone calls to evaluate IRS assistors objectively. We hold these recordings no longer than one week and use them only to measure the quality of assistance.
• We value our customers' opinions. Throughout this year, we will be surveying our customers for their opinions on our service.