Have a client whose new company in new state paid $1,000 for moving expense. They put it on her W-2 in Box 12 as Code P. Code P says in my software, "excludable moving expenses." It is adding it to Line 7, wages, in effect increasing the amt in Box 1 to make it taxable. But it is also transferring the $1,000 to 3903, line 3 which must be deducted from actual moving expense. What? Am I missing something here? How can it be added to taxable income and then deducted from eligible moving expense as well? I think the entry on 3903 is correct. I do not think the increase in Line 7 is correct. Or am I too far gone to think at this hour?
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Moving Accountable Plan
See Pub 521 - around page 10
Accountable Plan rules and Non Accountable Plans
Maybe that will assist you determining if the amount is actually includeded in Box 1 or not
Sandy -
I agree with you, it should not be added to wage income if in box 12 coded with a P. What software are you using?Comment
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Moving Expense
Yes, it should be in box 1 on the w-2 as, either you were reimbursed or the movers were directly paid by the employer. It is shown in box 12 so that if you have additional expenses above box 12 amount you can claim those as an adjustment ot your income. IF you DON"T prepare the 3903, you are agreeing to pay taxes on the reimbursement. The employer is showing it so they can claim the expense for themselves, as well.Comment
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ATX. I cannot tell from the W-2 if the moving expense is actually already included in Box 1, which is how these used to be handled. It is the software which is adding it to Line 7. Line 7 wages are showing up exactly $1,000 more than Box 1 input. If the company included it in Box 1, then the software is also adding it in, obviously that's wrong. But in the past when we did moving expenses, we deducted all allowable since it was included in Box 1. This Box 12, code P is new for me. Am going to read Pub 521 link per Sandy and see if that helps. I can make it work. It's just nice if I understand it.Comment
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It appears from these instructions, that the only time an employer uses Box 12, Code P is if it IS an accountable plan. These expenses are "excludable" meaning they should NOT be in Box 1. So I believe this addition to Line 7 is a software error. It properly transfers to 3903 to reduce the TP's deduction, however. If it is a non-accountable plan, it says it will be in Box 1. But then it would NOT be in Box 12-P, and does not transfer as a reimbursement from the employer per Pub 521. First, I need to get the TP to inquire of the employer which it was, and also get some other documentation like a year-end pay stub or other papers which specifically show how this was treated. There is one instance where reimbursements can be divided between Box 12 and Box 1. The software would have no way to calculate this, however, so I still believe that addition to Line 7 is wrong. Will check on that too. Funny, I may not have even caught this except for the two states' part-year returns. It did not add up. Took me a while to find out why.See Pub 521 - around page 10
Accountable Plan rules and Non Accountable Plans
Maybe that will assist you determining if the amount is actually includeded in Box 1 or not
SandyLast edited by Burke; 03-24-2011, 11:16 AM.Comment
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I think it is the software error too. I did a dummy return in Proseries and it does not add the code P amount to wages.
I understand the moving expense, as you explained, should not be included in box 1 if it was an excludable amount. If it was not an excludable amount it should not be in box 12 w/ code P.
If just an allowance is given then it is normally grossed up and included in box 1.Comment
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Thanks for checking in your program. It just doesn't make sense to me, and I ain't doin' it until I am convinced it is right.Comment
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