Publication 521 - Moving Expenses - 2002 (Page 9 of 17) in pdf

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Expenses of buying or selling a home.

You cannot claim a moving expense deduction

for expenses covered by these reimbursements

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Expenses of getting or breaking a lease.

(see Reimbursements under How To Report,

CAUTION

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Home improvements to help sell your home.

later).

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Loss on the sale of your home.

Expenses deducted in earlier year. If you receive

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Losses from disposing of memberships in clubs.

reimbursement this year for moving expenses deducted in

an earlier year, and the reimbursement is not included as

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Meal expenses.

wages in box 1 of your Form W –2, you must include the

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Mortgage penalties.

reimbursement on line 21 of your Form 1040. Your em-

ployer should show the amount of your reimbursement in

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Pre-move househunting expenses.

box 12 of your Form W –2.

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Real estate taxes.

Reimbursements included in income. Your employer

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Refitting of carpets and draperies.

must include in your income any reimbursements made (or

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treated as made) under a nonaccountable plan, even if

Security deposits (including any given up due to the

they are for deductible moving expenses. See Reimburse-

move).

ments under How To Report, later. Your employer must

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Storage charges except those incurred in transit and

also include in your gross income as wages any reim-

for foreign moves.

bursements of, or payments for, nondeductible moving

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expenses. This includes amounts your employer reim-

Temporary living expenses.

bursed you under an accountable plan (explained later) for

meals, househunting trips, and real estate expenses. It

No double deduction. You cannot take a moving ex-

also includes reimbursements that exceed your deductible

pense deduction and a business expense deduction for

expenses and that you do not return to your employer.

the same expenses. You must decide if your expenses are

deductible as moving expenses or as business expenses.

Reimbursement for deductible and nondeductible ex-

penses. If your employer reimburses you for both deduct-

For example, expenses you have for travel, meals, and

ible and nondeductible moving expenses, your employer

lodging while temporarily working at a place away from

must determine the amount of the reimbursement that is

your regular place of work may be deductible as business

not taxable and not subject to withholding. Your employer

expenses if you are considered away from home on busi-

must treat any remaining amount as taxable wages and

ness. Generally, your work at a single location is consid-

withhold income tax, social security tax, and Medicare tax.

ered temporary if it is realistically expected to last (and

does in fact last) for one year or less.

Amount of income tax withheld. If the reimbursements

See Publication 463, Travel, Entertainment, Gift, and

or allowances you receive are taxable, the amount of

Car Expenses, for information on deducting your ex-

income tax your employer will withhold depends on several

penses.

factors. It depends in part on whether or not income tax is

withheld from your regular wages, on whether or not the

reimbursements and allowances are combined with your

regular wages, and on any information you have given to

Tax Withholding

your employer on Form W –4, Employee’s Withholding

and Estimated Tax

Allowance Certificate.

Estimated tax. If you must make estimated tax payments,

Your employer must withhold income tax, social security

you need to take into account any taxable reimbursements

tax, and Medicare tax from reimbursements and al-

and deductible moving expenses in figuring your estimated

lowances paid to you that are included in your income. See

tax. For details about estimated tax, see Publication 505,

Reimbursements included in income, later.

Tax Withholding and Estimated Tax.

Reimbursements excluded from income. Your em-

How To Report

ployer should not include in your wages reimbursements

paid under an accountable plan (explained later) for mov-

ing expenses that you:

The following discussions explain how to report your mov-

ing expenses and any reimbursements or allowances you

1) Could deduct if you had paid or incurred them, and

received for your move.

Use Form 3903 to report your moving expenses. Use a

2) Did not deduct in an earlier year.

separate Form 3903 for each qualified move.

These reimbursements are fringe benefits excludable from

You do not have to complete Form 3903 if all of the

your income as qualified moving expense reimburse-

following apply.

ments. Your employer should report these reimburse-

ments in box 12 of Form W – 2.

1) You moved in an earlier year.

Page 9

Publication 521 - Moving Expenses - 2002 Page 9

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