Your employer reimbursed moving expenses are not deductible. Code P in box 12 of your W-2 indicates deductible moving expenses, the fact that there is no P indicates not deductible. Additionally gross-up indicates an extra payment from employer to cover the extra tax liability this method creates. To record the amounts in your TurboTax, just transcribe the information exactly from your W-2 into the W-2 section of TurboTax.
When the company reimburses you for an expense that the
IRS does not consider deductible, the company’s reimbursement becomes a tax
burden to you.
Gross-Up:
This enables you to be fully reimbursed for nondeductible
moving expenses or provides some tax relief, depending on the company’s tax
policy, for the monies paid to your or on your behalf.
MOVING EXPENSES-DEDUCTIBLE FROM INCOME
Whether your employer reimburses you or not for any of
the following expenses, they are deductible from your income net of any
reimbursement.
- Household Goods and personal effects,
includes cost of van, packing, crating, insurance, disconnecting &
reconnecting utilities, and all appliances, satellite dishes, antennas, cable,
etc.
- Storage of household goods and personal items
within a period of 30 consecutive days.
- Shipping a car, motorcycle, boat, and pets.
- Rental vans plus gas, oil, tolls, and parking
fees.
- Tips for the movers, includes cost of food
items, donuts, coffee, pizza and sodas, etc.
- Cost of any packing supplies you purchase for
personal packing.
- Moving a college student.
- Transportation from Temporary living to your
permanent home.
- Rental car for final move up to four days – 3
days in old location – 1 day in new location.
- The IRS has adjusted the standard mileage
allowances for use of a car in travel to 19.5 cents per mile for moving
expenses.
REIMBURSEMENTS (THE W-2 BOX 1 AND BOX 12)
Deductible moving expense reimbursements paid directly to
you will be reported in Box 12 of your W-2 and will be preceded by the code
letter “P”. Under no circumstances should they be included in Wages that are
show in Box 1 of your W-2. Your employer must withhold federal income tax,
social security tax, Medicare Tax and state tax from reimbursements. Most
employers increase your reimbursement to make up for the deductions for taxes –
called Gross-Up.
The IRS has a great tool on their website called "Can I deduct my moving expenses?" Just click this link, answer a few questions and the tool will tell exactly what you can deduct and for how much:
http://www.irs.gov/uac/Can-I-Deduct-My-Moving-Expenses%3FIRS Pub 521, Moving Expenses: http://www.irs.gov/uac/Publication-521,-Moving-Expenses
