If someone moves from foreign country to USA on H1 B visa then for the first year can Rent be claimed as part of moving expenses ?

[gundecharahul]

I moved from India to US in Jan 2015 on H1 visa. While filing taxes for year 2015, my tax consultant deducted year 2015 Rent as part of moving expenses. 

Last month, I got an Audit notice from IRS asking to submit the proofs and receipts, if not then they are asking me to Pay the tax (and interest on due tax )on the amount that was claimed as moving expenses.

My question is, were this expenses correctly deducted as moving expenses? Was I eligible to claim Rent as moving expenses?

I was reading Pub 521 and as per that I satisfy the criteria of distance and time. Distance of my job location in US is definitely more than 50 miles (since I was earlier living in India). I worked full time for the whole 2015 with my employer.

Any help or guidance on this will be appreciated. Please let me know.

[bine22 · Accepted solution]

Your rent is not a moving expense. Your flight ticket would be.

Did you contact that tax consultant? He should really help you with this.

[gundecharahul]

Thanks for your response.  I contacted my tax consultancy and they are suggesting to submit rent and utility receipts along with a letter from my employer that these expenses were not reimbursed.

Also, my employer is in different state (more than 50 miles) and I work for a client company which is in different state so my tax consultant is justifying Rent as moving expenses incurred away from tax home.

It's confusing since Pub 521 says Accommodation expenses can be deducted if you are away (more than 50 miles) from your tax home.

Please suggest if there is any specific article regarding this which can shed some light on this.

[bine22]

those are definitely not moving expenses. Lodging expenses would be moving expenses if you, for example, move into temporary quarters or a hotel to wait for an apartment or house to be finished. Or hotel expenses while house hunting. Your tax consultant might have confused those with temporary living expenses which would be reported on form 2106. However, if you lived and worked in the same place since you came to the US, I doubt that would apply.

[gundecharahul]

Ok, It's clear, I will pay the due tax and interest.
Thank you so much for your help!