Publication 521 - Moving Expenses - 2002 (Page 10 of 17) in pdf

2) You are claiming only storage fees while you are

Returning excess reimbursements, later, for information

away from the United States.

on how to handle these excess amounts.

3) Any amount your employer paid for the storage fees

Adequate accounting. You adequately account by

is included as wages in box 1 of your Form W –2.

giving your employer documentary evidence of your mov-

ing expenses, along with a statement of expense, an

Instead, enter the storage fees (after the reduction for the

account book, a diary, or a similar record in which you

part that is allocable to excluded income) on line 28, Form

entered each expense at or near the time you had it.

1040, and write “Storage” next to the amount.

Documentary evidence includes receipts, canceled

checks, and bills.

Where to deduct. Deduct your moving expenses on line

28 of Form 1040. The amount of moving expenses you can

Returning excess reimbursements. You must be re-

deduct is shown on line 5 of Form 3903.

quired to return any excess reimbursement for your mov-

ing expenses to the person paying the reimbursement.

You cannot deduct moving expenses on Form

Excess reimbursement includes any amount for which you

1040EZ or Form 1040A.

did not adequately account within a reasonable period of

CAUTION

time. For example, if you received an advance and you did

not spend all the money on deductible moving expenses,

Reimbursements

or you do not have proof of all your expenses, you have an

excess reimbursement.

This section explains what to do when you receive a

Reasonable period of time. What constitutes a “rea-

reimbursement (including advances and allowances) for

sonable period of time” depends on the facts and circum-

any of your moving expenses discussed in this publication.

stances of your situation. However, regardless of the facts

If you received a reimbursement for your moving ex-

and circumstances of your situation, actions that take

penses, how you report this amount and your expenses

place within the time specified in the following list will be

depends on whether the reimbursement was paid to you

treated as taking place within a reasonable period of time.

under an accountable plan or a nonaccountable plan.

These plans are discussed later. For a quick overview of

1) You receive an advance within 30 days of the time

how to report the reimbursement, see Table 2 on the next

you have an expense.

page.

2) You adequately account for your expenses within 60

Your employer should tell you what method of reim-

days after they were paid or incurred.

bursement is used and what records they require.

3) You return any excess reimbursement within 120

Employers. If you are an employer and you reimburse

days after the expense was paid or incurred.

employee moving expenses, how you treat this reimburse-

ment on your employee’s Form W –2 depends in part on

4) You are given a periodic statement (at least quar-

whether you have an accountable plan. Reimbursements

terly) that asks you to either return or adequately

treated as paid under an accountable plan are reported in

account for outstanding advances and you comply

box 12 with code P. For more information, see Publication

within 120 days of the statement.

535, Business Expenses.

Reimbursements treated as paid under nonaccountable

Employee meets accountable plan rules. If for all

plans, as explained later, are reported as pay. See Publi-

reimbursements you meet the three rules for an accounta-

cation 15, Circular E, Employer’s Tax Guide, for informa-

ble plan, your employer should not include any reimburse-

tion on employee pay.

ments of expenses in your income in box 1 of your Form

W–2. Instead, your employer should include the reim-

Accountable plans. To be an accountable plan, your

bursements in box 12 of your Form W –2.

employer’s reimbursement arrangement must require you

to meet all three of the following rules.

Example. You lived in Boston and accepted a job in

Atlanta. Under an accountable plan, your employer reim-

1) Your expenses must be of the type for which a de-

bursed you for your actual traveling expenses from Boston

duction would be allowed had you paid them your-

to Atlanta and the cost of moving your furniture to Atlanta.

self. The reasonable expenses of moving your

Your employer will include the reimbursement in box 12

possessions from your former home to your new

of your Form W –2. If your expenses are more than your

home, and traveling from your former home to your

reimbursement, show all of your expenses on lines 1 and 2

new home are two examples.

of Form 3903. Include the reimbursement on line 4 of Form

2) You must adequately account to your employer for

3903.

these expenses within a reasonable period of time.

Employee does not meet accountable plan rules.

3) You must return any excess reimbursement or allow-

You may be reimbursed by your employer, but for part of

ance within a reasonable period of time.

your expenses you may not meet all three rules.

An excess reimbursement includes any amount you

If your deductible expenses are reimbursed under an

are paid or allowed that is more than the moving expenses

otherwise accountable plan but you do not return, within a

that you adequately accounted for to your employer. See

reasonable period, any reimbursement of expenses for

Page 10

Publication 521 - Moving Expenses - 2002 Page 10

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