Publication 521 - Moving Expenses - 2002 (Page 13 of 17) in pdf

The employer included this reimbursement on Tom’s

Example

Form W –2 for the year. The reimbursement of deductible

expenses, $7,266 ($6,800 + $466) for moving household

goods and travel to San Diego, was included in box 12 of

Tom Smith is married and has two children. He owned his

Form W –2. His employer identified this amount with code

home in Detroit where he worked. On February 8, his

employer told him that he would be transferred to San

The employer included the balance, $3,399 reimburse-

Diego as of April 10 that year. His wife, Peggy, flew to San

ment of nondeductible expenses, in box 1 of Form W –2

Diego on March 1 to look for a new home. She put a down

with Tom’s other wages. He must include this amount on

payment of $25,000 on a house being built and came back

line 7 of Form 1040. The employer withholds taxes from

to Detroit on March 4. The Smiths sold their Detroit home

the $3,399, as discussed under Nondeductible expenses,

for $1,500 less than they paid for it. They contracted to

earlier. Also, Tom’s employer could have given him a

have their personal effects moved to San Diego on April 3.

separate Form W –2 for his moving reimbursement.

The family drove to San Diego where they found that their

Tom figures his deduction for moving expenses as fol-

new home was not finished. They stayed in a nearby motel

lows:

until the house was ready on May 1. On April 10, Tom went

to work in the San Diego plant where he still works.

Item 5, moving personal effects (line 1) . . . . . . . . $8,000

His records for the move show:

Item 6, driving to San Diego ($286 + $180)

1) Peggy’s pre-move househunting trip:

(line 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

466

Travel and lodging . . . . . . . . . . . .

$ 449

Total deductible moving expenses (line 3) . . . . . . $8,466

Meals . . . . . . . . . . . . . . . . . . . . .

75 $ 524

Minus: Reimbursement included in box 12

2) Down payment on San Diego home . . . . . . .

25,000

of Form W –2 (line 4) . . . . . . . . . . . . . . . . . . . .

7,266

3) Real estate commission paid on sale of

Deduction for moving expenses (line 5) . . . . . $1,200

Detroit home . . . . . . . . . . . . . . . . . . . . . . . . .

3,500

Tom enters these amounts on Form 3903 to figure his

4) Loss on sale of Detroit home (not including

deduction. His Form 3903 and Distance Test Worksheet

real estate commission) . . . . . . . . . . . . . . . .

1,500

are shown later. He also enters his deduction, $1,200, on

5) Amount paid for moving personal effects

line 28, Form 1040.

(furniture, other household goods, etc.) . . . . .

8,000

Nondeductible expenses. Of the $43,040 expenses that

6) Expenses of driving to San Diego:

Tom incurred, the following items cannot be deducted.

Mileage (Start 14,278; End 16,478)

•

Item 1, pre-move househunting expenses.

2,200 miles at 13 cents a mile . . .

$ 286

•

Lodging . . . . . . . . . . . . . . . . . . . .

180

Item 2, the down payment on the San Diego home. If

Meals . . . . . . . . . . . . . . . . . . . . .

320

786

any part of it were for payment of deductible taxes or

interest on the mortgage on the house, that part

7) Cost of temporary living expenses in

would be deductible as an itemized deduction.

San Diego:

•

Motel rooms . . . . . . . . . . . . . . . .

$1,450

Item 3, the real estate commission paid on the sale

Meals . . . . . . . . . . . . . . . . . . . . .

2,280

3,730

of the Detroit home. The commission is used to

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $43,040

figure the gain or loss on the sale.

Tom was reimbursed $10,665 under an accountable

•

Item 4, the loss on the sale of the Detroit home. The

plan as follows:

Smiths cannot deduct it even though Tom’s em-

Moving personal effects . . . . . . . . . . . . . . . . . . $ 6,800

ployer reimbursed him for it.

Travel (and lodging) to San Diego . . . . . . . . . . .

466

•

Item 6, the meals expenses while driving to San

Travel (and lodging) for househunting trip . . . . .

449

Diego. (However, the lodging and car expenses are

Lodging for temporary quarters . . . . . . . . . . . . .

1,450

deductible.)

Loss on sale of home . . . . . . . . . . . . . . . . . . . .

1,500

•

Total reimbursement . . . . . . . . . . . . . . . . . . . $10,665

Item 7, temporary living expenses.

Tom’s employer gave him a breakdown of the amount of

reimbursement.

Page 13

Publication 521 - Moving Expenses - 2002 Page 13

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