Publication 521 - Moving Expenses - 2011 (Page 11 of 19) in pdf

receive the full amount of your pay regardless of whether

though they are for deductible moving expenses. See

you had any moving expenses.

Nonaccountable Plans

under Types of Reimbursement

Plans, earlier. Your employer also must include in your

If you are not sure if the moving expense reimbursement

gross income as wages any reimbursements of, or pay-

arrangement is an accountable or nonaccountable plan,

ments for, nondeductible moving expenses. This includes

ask your employer.

amounts your employer reimbursed you under an account-

Your employer will add the amount of any reimburse-

able plan (explained earlier) for meals, househunting trips,

ment paid to you under a nonaccountable plan to your

and real estate expenses. It also includes reimbursements

wages, salary, or other pay. Your employer will report the

that exceed your deductible expenses and that you do not

total in box 1 of your Form W-2.

return to your employer.

Example. To get you to work in another city, your new

Reimbursement for deductible and nondeductible ex-

employer reimburses you under an accountable plan for

penses. If your employer reimburses you for both deduct-

the $7,500 loss on the sale of your home. Because this is a

ible and nondeductible moving expenses, your employer

reimbursement of a nondeductible expense, it is treated as

must determine the amount of the reimbursement that is

paid under a nonaccountable plan and must be included as

not taxable and not subject to withholding. Your employer

income in box 1 of your Form W-2.

must treat any remaining amount as taxable wages and

withhold income, social security, and Medicare taxes.

Uniform Relocation Assistance and Real

Amount of income tax withheld. If the reimbursements

Property Acquisition Policies Act of 1970

or allowances you receive are taxable, the amount of

income tax your employer will withhold depends on several

Do not include in income any moving expense payment

factors. It depends in part on whether income tax is with-

you received under the Uniform Relocation Assistance and

held from your regular wages, on whether the reimburse-

Real Property Acquisition Policies Act of 1970. These

ments and allowances are added to your regular wages,

payments are made to persons displaced from their

and on any information you have given to your employer

homes, businesses, or farms by federal projects.

on Form W-4, Employee’s Withholding Allowance Certifi-

cate.

Tax Withholding and Estimated Tax

Your employer can treat your reimbursements as sup-

plemental wages and not include the reimbursements and

Your employer must withhold income, social security, and

allowances in your regular wages. The employer can with-

Medicare taxes from reimbursements and allowances paid

hold income tax on supplemental wages at a flat rate which

to you that are included in your income. See

Reimburse-

may be different from your regular tax rate.

ments included in

income, later.

Estimated tax. If you must make estimated tax payments,

Reimbursements excluded from income. Your em-

you need to take into account any taxable reimbursements

ployer should not include in your wages reimbursements

and deductible moving expenses in figuring your estimated

paid under an accountable plan (explained earlier) for

tax. For details about estimated taxes, see Publication

moving expenses that you:

505, Tax Withholding and Estimated Tax.

•

Could deduct if you had paid or incurred them, and

•

Did not deduct in an earlier year.

How and When To Report

These reimbursements are fringe benefits excludable from

your income as qualified moving expense reimburse-

This section explains how and when to report your moving

ments. Your employer should report these reimburse-

expenses and any reimbursements or allowances you

ments on your Form W-2, box 12, with Code P.

received for your move. For a quick overview, see Table 2,

later.

You cannot claim a moving expense deduction

for expenses covered by reimbursements ex-

Form 3903

cluded from income (see

Accountable Plans

CAUTION

under Types of Reimbursement Plans, earlier).

Use Form 3903 to figure your moving expense deduction.

Expenses deducted in earlier year. If you receive a

Use a separate Form 3903 for each move for which you

reimbursement this year for moving expenses deducted in

are deducting expenses.

an earlier year, and the reimbursement is not included as

Do not file Form 3903 if all of the following apply.

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

•

You moved to a location outside the United States in

reimbursement in income on line 21 of your Form 1040.

an earlier year.

Your employer should show the amount of your reimburse-

•

ment in box 12 of your Form W-2.

You are claiming only storage fees while you were

away from the United States.

Reimbursements included in income. Your employer

•

must include in your income any reimbursements made (or

Any amount your employer paid for the storage fees

treated as made) under a nonaccountable plan, even

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

Publication 521 (2011)

Page 11

Publication 521 - Moving Expenses - 2011 Page 11

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