code P on W-2

[TAX]

Client has Code "P" on W-2.

Do I need to anything? It seems like code "P" is qualified reimbursed moving expesnes directly to employee. There for it not taxable.

(1) It is not included in box 1 of W-2

(2) Take total of moving expenses and compare to code "P" amount.

Then report income or deduct depending on the direction of difference

Please tell me if I am doing the right way.

[Koss]

Form 3903

You have the right idea.

Your software may force you to complete Form 3903.

On a purely abstract level, it is unlikely that the reimbursement was exactly equal to the person's qualified moving expenses. So the programmers consider it very likely that there will either be an excess reimbursement that must be reported as income, or additonal expense that can be deducted. The program's algorithm is likely to force you into Form 3903 once it reads the Code P.

Your client may assert that the reimbursement was equal to or less than the moving expenses, and may feel that any additional expense was minimal, and that it isn't worth fooling with.

If your program puts you into the 3903, you can enter a figure for expenses that is equal to the reimbursement, and then the program will determine that Form 3903 does not even need to be filed. It won't even print (unless you force print that particular form).

I've been doing this for too many years. It's gotten to the point where I think like the computer.

Code P triggers a required Form 3903, just like a Schedule C will trigger a required Schedule SE. But if you make the expense equal to the reimbursement, that will turn the form off.

[TAX]

Code P turns triggers a required Form 3903, just like a Schedule C will trigger a required Schedule SE. But if you make the expense equal to the reimbursement, that will turn the form off.[/QUOTE]

Thank you.

You are right. My pro series takes me to 3903 line 4 and then I have to put expenses on line 1. I think I will come out to zero or so.


On a different sunject: My client moved from NJ to CA. He sold house in NJ. Do I need to look out for anything?

He sold house in NJ at a gain of $170,000. He was in the house for 2 years and 4 months. His move was job related. I know gain is not taxable.

[Koss]

Gain on Sale of Main Home

He sold house in NJ at a gain of $170,000. He was in the house for 2 years and 4 months. His move was job related. I know gain is not taxable.

If he lived there for two years or more, then he certainly qualifies for the exclusion.

That's a lot of gain. (I suppose "a lot" is a relative term.)

You probably need to make sure that he didn't exclude another $170K of gain the last time he sold a his main home [LOL]

...'cause if he did, then he's only got 80K left that he can exclude.

Actually some of the worst cases I have heard about, including one or two that were examined by the IRS and wound up in the Tax Court, were cases involving divorce and/or remarriage, where on spouse had used some of the exclusion...

Really makes you stop and think. When you marry someone with a past, or some baggage or whatever... you think about assets and liabilities... and children... and child support. Who would ever even think to ask about a person's tax attributes?

I guess maybe when you get to the seven figure income level, you have lawyers that think about this stuff for you.

[Koss]

Attributes

...which reminds of a thread much earlier this year, in which my warped sense of humor led me to speculate about what would happen if an individual elected to file his or her return using a fiscal year.

Last year I prepared the very first tax return for my 17-year old stepdaughter, and I would have liked to choose a fiscal year for her, just for the entertainment value of it. But that kind of election can't be revoked without filing a 3115... talk about saddling a kid with baggage for the rest of their life.

Fast forward a few years into college... and her roommate says, "What in the world are you talking about? What do you mean you file your taxes in September?"

I suggested that if this sort of thing ever caught on, maybe we would start hearing a new pickup line: "So when does your fiscal year end?"