Publication 521 - Moving Expenses - 2011 (Page 10 of 19) in pdf

Accountable Plans

You meet accountable plan rules. If for all reimburse-

ments you meet the three rules for an accountable plan

To be an accountable plan, your employer’s reimburse-

(listed earlier), your employer should not include any reim-

ment arrangement must require you to meet all three of the

bursements of expenses in your income in box 1 of your

following rules.

Form W-2, Wage and Tax Statement. Instead, your em-

ployer should include the reimbursements in box 12 of your

•

Your expenses must have a business connection –

Form W-2.

that is, you must have paid or incurred deductible

expenses while performing services as an employee

Example. You lived in Boston and accepted a job in

of your employer. Two examples of this are the rea-

Atlanta. Under an accountable plan, your employer reim-

sonable expenses of moving your possessions from

bursed you for your actual traveling expenses from Boston

your former home to your new home, and traveling

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

from your former home to your new home.

Your employer will include the reimbursement on your

•

You must adequately account to your employer for

Form W-2, box 12, with Code P. If your moving expenses

these expenses within a reasonable period of time.

are more than your reimbursement, you may be able to

deduct your additional expenses (see

How and When To

•

You must return any excess reimbursement or allow-

Report, later).

ance within a reasonable period of time.

You do not meet accountable plan rules. You may be

reimbursed by your employer, but you may not meet all

Adequate accounting. You adequately account for your

three rules for part of your expenses.

moving expenses by giving your employer documentation

If your deductible expenses are reimbursed under an

of those expenses, such as a statement of expense, an

otherwise accountable plan but you do not return, within a

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

reasonable period, any reimbursement of expenses for

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

which you did not adequately account, then only the

Documentation includes receipts, canceled checks, and

amount for which you did adequately account is consid-

bills.

ered as paid under an accountable plan. The remaining

expenses are treated as having been reimbursed under a

Reasonable period of time. What constitutes a “reason-

nonaccountable plan (discussed below).

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

stances of your situation. However, regardless of the facts

Reimbursement of nondeductible expenses. You may

and circumstances, actions that take place within the times

be reimbursed by your employer for moving expenses,

specified in the following list will be treated as taking place

some of which are deductible expenses and some of which

within a reasonable period of time.

are not deductible. The reimbursements you receive for

the nondeductible expenses and any allowances for mis-

•

You receive an advance within 30 days of the time

cellaneous or unspecified expenses are treated as paid

you have an expense.

under a nonaccountable plan (see below) and are included

•

You adequately account for your expenses within 60

in your income. If you are reimbursed by your employer for

days after they were paid or incurred.

the taxes you must pay (including social security and

Medicare taxes) because you have received taxable mov-

•

You return any excess reimbursement within 120

ing expense reimbursements, you must pay tax on this

days after the expense was paid or incurred.

reimbursement as well, and it is treated as paid under a

•

You are given a periodic statement (at least quar-

nonaccountable plan.

terly) that asks you to either return or adequately

account for outstanding advances and you comply

Nonaccountable Plans

within 120 days of the statement.

A nonaccountable plan is a reimbursement arrangement

Excess reimbursement. This includes any amount you

that does not meet the three rules listed earlier under

are paid (including advances and allowances) that is more

Accountable Plans.

than the moving expenses that you adequately accounted

In addition, the following payments will be treated as

for to your employer within a reasonable period of time.

paid under a nonaccountable plan.

•

Returning excess reimbursements. You must be re-

Excess reimbursements you fail to return to your

quired to return any excess reimbursement for your mov-

employer.

ing expenses to the person paying the reimbursement.

•

Reimbursements of nondeductible expenses. See

Excess reimbursement includes any amount for which you

Reimbursement of nondeductible

expenses, earlier.

did not adequately account within a reasonable period of

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

If an arrangement pays for your moving expenses by

not spend all the money on deductible moving expenses,

reducing your wages, salary, or other pay, the amount of

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

the reduction will be treated as a payment made under a

excess reimbursement.

nonaccountable plan. This is because you are entitled to

Page 10

Publication 521 (2011)

Publication 521 - Moving Expenses - 2011 Page 10

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