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Tax Year Prior to 2020: If my employer paid my moving expenses do I pay taxes on that amount?

 
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Tax Year Prior to 2020: If my employer paid my moving expenses do I pay taxes on that amount?

Hi soonershan - 

It depends on what type of expenses they paid for and if it was reported on your W-2.  If they aren't "typically" a deductible expense and are included in your W-2, the employer will usually "gross up" the amount to compensate for taxes.  That said, you may be able to deduct expenses depending on your situation.

Whether or not you can deduct any moving expenses depends on the type of reimbursement plan your employer has.  If you don't know, you will need to ask them.  If they have an "accountable" plan, the deductible expenses would not be included in Box 1 of your W-2 and wouldn't be deductible.  You can get exact details and examples in the IRS Publication I will link to later.  

Your employer should not include in your wages reimbursements paid under an accountable plan for moving expenses that you:

·         Could deduct if you had paid or incurred them, and

·         Did not deduct in an earlier year.

These reimbursements are fringe benefits excludable from your income as qualified moving expense reimbursements. Your employer should report these reimbursements on your Form W-2, box 12, with Code P.

If your deductible expenses are included in Box 1 of your W-2, you can deduct them if your move qualifies.

You can deduct the cost of transportation and lodging for yourself and members of your household while traveling from your former home to your new home. This includes expenses for the day you arrive.  However, you may not include any expenses for food.

The day of arrival is the day you secure lodging at the new place of residence, even if the lodging is on a temporary basis.  You can include any lodging expenses you had in the area of your former home within one day after you could no longer live in your former home because your furniture had been moved.

You can include the cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home.

The distance test: Your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home.

The time test: If you are an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location. There are exceptions to the time test in case of death, disability and involuntary separation, among other things.


This IRS link may be helpful as well http://www.irs.gov/taxtopics/tc455.html  and this IRS Publication http://www.irs.gov/publications/p521/

Hope this helps!

Karen



mdjanssen
New Member

Tax Year Prior to 2020: If my employer paid my moving expenses do I pay taxes on that amount?

This thread contradicts the next thread.

"If your deductible expenses are included in Box 1 of your W-2, you can deduct them if your move qualifies"

"Code P in box 12 of your W-2 indicates deductible moving expenses, the fact that there is no P indicates not deductible."
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