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nikhiljain1975
New Member

Moving expenses repaid to company

I took a job with a company and left after 10 months, but because i left within 1 year i had to repay my moving expenses to the company. Where can i claim a deduction for repaying the company my moving expense?
1 Reply
KatherineC
New Member

Moving expenses repaid to company

This depends on a couple of factors.

Did you leave the same year that they reimbursed your moving expenses?

If so, the answer will depend on how the moving expense reimbursement was reported, if it was reported.  Chances are they did not report the moving expense reimbursement on your Form W-2 since you repaid it in the same year.

If you have no taxable income from the reimbursement, then you have no tax deduction.

If you received the reimbursement in 2015, and the reimbursement was reported on your Form W-2, then your repayment in 2016 will be handled as shown below:

The Claim of Right allows you to take a deduction (or credit) for repayment of income that was taxable in a prior year.  If you don’t itemize, that won't be helpful to you!

IF you pay back less than $3000, the repayments are deductible on Schedule A (subject to the limitation of 2% of your Adjusted Gross Income.)

To report the repayment:

  • Log into your return
  • Click on Federal Taxes
  • Click on Deductions and Credits
  • Scroll to Other Deductions and Credits. 
  • If needed, click on the Show more button.
  • Click the button next to Other Deductible Expenses
  • The first screen after this does not apply to you for this question.
  • On the next screen, you will be asked if you have any of the less common expenses.  (One of the expenses listed is the repayment of $3000 or less.
  • On the following screen, you can enter a description and amount.

If you paid more than $3000 and prefer to take a deduction on your Schedule A:

  • The next screen after the instructions above asks if you had Right of Repayment MORE than $3000.
  • Click yes, and then enter the amount you repaid.
  • IF you pay back more than $3000, you have the option of taking a tax credit in 2016 (the year of the repayment). 

To calculate and claim the credit you would need to use TurboTax CD/Download, because the amount has to be entered in Line 73, box d of your Form 1040.  Per IRS instructions from the Pub 17:

"If you are claiming a credit for repayment
of amounts you included in your
income in an earlier year because it appeared
you had a right to the income, include
the credit on line 73. Check box d
and enter “I.R.C. 1341” in the space
next to that box. See Pub. 525 for details
about this credit."    
Click on this link:
https://www.irs.gov/pub/irs-pdf/p525.pdf    
Go to page 34 and start reading at repayments.  It seems that you have to recalculate what your tax would have been if the income you repaid wasn't included when you originally filed.  Then take the difference between 1) the taxes you actually paid with the income included and 2) the taxes you would have paid if the income hadn't included the repayment amount.  
Enter the difference as a credit on Line 73, check box d and indicate I.R.C. 1341.


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