Moving Expenses / Employer Reimbursement – Still Deduct?

[bbrownatl]

So, I’m a bit confused here. A client moves to a new city and new job and incurs moving expenses. Normally, those would be deductible. However, the employer reimburses those amounts. So no moving expense deduction (assuming the full costs were reimbursed). Further, the moving expense reimbursements are included in W2 income. So, am I thinking correct here. This is like submitting an expense report to your employer and getting reimbursed yet it then goes on your W2 as taxable income. Seems like the taxable income should be offset by the moving expenses. Guess I’ve been at this too long today. Any clarification of my thinking is much appreciated.

[FEDUKE404]

Employer moving expense payments may or may not be taxable

Well, perhaps.

You need to clarify if the employer paid "moving expenses" and also included allowable moving expenses as wages (which means you should deduct them on Form 3903), or because the employer is a good employer or the employee is worth keeping, the employer also paid some "extras" to appease the displaced employee. Those expenses could include such things as gross up wages, "incentives," closing costs on home sale/purchase, extra moving expenses to include meals or excessive mileage/lodging rates, and similar. You could not deduct them....and they thus become taxable income.

It is possible the employer paid (even directly) some allowable moving expenses. Most major employers know the rules, and do not normally clutter up taxable income on a W2 with what would later constitute deductible moving expenses on Form 3903.

You also should look around for Code P in box 12 of the employee's W2, and if an entry is there carefully reevaluate the entire scenario.

FE

[David1980]

You also should look around for Code P in box 12 of the employee's W2, and if an entry is there carefully reevaluate the entire scenario.

Yup. I gave up counting the number of times taxpayers told me something was included in wages on their W-2 and that they should therefore be able to deduct it that wasn't. They're so sure until they find a final paystub for the year with the salary break down.