The Foreign Service Journal - January/February 2018
THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2018 75 Family members who are educators (K-12) can take addi- tional advantage of up to a $250 Educator Expense Deduc- tion (1040 line 23) for unreimbursed business expenses even if they do not itemize. Qualifying expenses include books, supplies, computer equipment and software, classroom equipment and supplementary materials. Itemizers may claim more for unreimbursed business expenses, subject to the 2 percent floor. Un r e imbu r s ed Mov i ng Ex pen s es Both taxpayers who itemize and those who claim the stan- dard deduction may claim unreimbursed moving expenses as an adjustment to income. To take advantage of this deduction, taxpayers must meet three threshold require- ments. First, the move must be closely related to the start of work (expenses incurred within one year of the start date for a new job and the taxpayer must move closer to the new job). Second, taxpayers must meet the distance test (the new job must be at least 50 miles farther from their old home than the old home is from the old job). Third, taxpay- ers must meet the time test (they must work full time for at least 39 weeks during the first 12 months after arriving to new job area). For an illustration of these requirements, please see Figure A in IRS publication 521, www.irs.gov/pub- lications/p521. If those requirements are met, deductible expenses include the cost of transportation, storage and travel costs of moving the taxpayer, possessions (including pets) and the taxpayer’s family. Note that the cost of meals during the move does not qualify. Of f i c i a l Res i den c e Ex pen s es ORE reimbursements defray the “unusual” expenses from the operation of an official residence while extending official hospitality, receiving foreign dignitaries and hold- ing official ceremonies. Conversely, a principal representa- tive is expected to bear the burden of “usual” household expenses of 3.5 percent of their salary (3 FAM 3253.1; DSSR 040(l)). None of the 3.5 percent of “usual” household expenses is deductible because it is “payment for ordinary, everyday living expenses, and is not excludable from gross income” (Revenue Ruling 90-64). These expenses cannot be deducted as miscellaneous business expenses because they are personal expenses. Official expenses for which any State Department employee is not reimbursed are deductible as unreimbursed employee expenses. No deduction is allowed for official expenses that are reimbursed.