My employer pd the moving co. directly for a qualifying move. The amt pd WAS incl in W-2 Bx 1 but no P Amt in Bx12. do report Exp on 3903?

[Anita01 · Accepted solution]

Yes, you do.  Enter all the qualifying expenses and then you'll be asked if any was reimbursed and you can enter the amount included on the W-2.

If you're filing state returns, remember that moving expense is usually deductible on the state return but only on the state you moved TO, not From

[katrinamjenkins]

those steps are not what is happening. It says to enter any reimbursement for moving expenses that were NOT included on the w-2. Well they WERE included on W-2.  this is actually a little more convoluted is there any way i can talk to someone about this?

[Anita01]

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[katrinamjenkins]

we actually moved in 2016 and again in 2017. In 2017 we paid the moving company directly. I had two employers but related companies. One employer agreed to reimb a flat amount which was less than what we paid but they grossed it up so they could deduct ss/mcr and the check would be the amount agreed  upon.  So i have a W-2 with just that amount on it. But there is nothing in Box 12 coded P.  So as of right now i have entered the amount we paid to moving company plus mileage on 3903 and of course the W-2 has been entered. So the new employer also agreed to pay for some moving expenses but didnt' start job until 1/1/18 so I just received a reimbursement check from them but they cut it out of A/P they did not issue a payroll check nor withhold any taxes. My income for 2018 will be half of what it was in 2017 so I'm thinking i should report the expense in the year it was paid and of course the one reimbursement will be reported because its on a W-2. Then report the 2018 reimbursement in 2018 with no offsetting expense because our tax rate will be lower in 2018. does this seem to be the correct way to do it?

[katrinamjenkins]

my initial question really applied to 2016 because I wondered if I made a mistake on that return. That year it was more simple. The employer paid the moving company then grossed up what they paid to include income tax, FICA, and MCR.  I assumed that because the employer paid the expense that i should not deduct it on 3903. But maybe that was wrong since they did report it as income i get to report the expense.  I have read Pub 521 and am not getting any clarity.

[Anita01]

well, you essentially can only deduct moving expenses if you stay employed in the area for 39 weeks following the move.  If you moved to  a new area with a new employer in 2017, then you did not work in that area you moved to in 2016 for 39 weeks, which would make those expenses nondeductible.  Do I understand you correctly?

[Anita01]

If your employer included the moving expense reimbursement in Box 1 wages in 2016, then you did get to deduct expenses if you remained working in that area for 39 weeks.

[Anita01]

The need to enter expenses when the W-2 shows a code P is only to allow that amount to remain nontaxable.  Only certain expenses are deductible and sometimes an employer will pay you for extra things,. like an extra week in a hotel when you arrive, and then they include these nondeductible amounts in the code P total.  so, the entry of moving expense in that case is just to verify that they only paid eligible expenses.  If the eligible expenses you enter are less than the code P amount, the excess is added to your taxable wages.

[katrinamjenkins]

thank you so much for helping me!!  we first moved 10/2016 then moved again 10/2017 so thatis more than 39 weeks. So It looks like i need to amend my 2016 return to include the deductible moving expenses the employer paid which was basically the cost to move household goods.

[katrinamjenkins]

so for 2017 i get to deduct the entire qualifying moving expenses this year even though we only received a partial reimbursemt from employer which was included in Box 1 of W-2?

[Anita01]

For 2016, you should amend because you do get to deduct the moving expenses since they were essentially paid with taxable income, because your employer added them to Box 1 of your w-2.  In 2017, you're entering the expenses but you will really only get a deduction for any amount over the code P amount.  It may look like a deduction as far as your refund goes but what's really happening is your code P amount is being included in your taxable income UNTIL you enter your expenses.  By entering them you see the tax owed or refund amount change in your favor because you've just confirmed the code  amount was indeed nontaxable and the program is removing it from taxable income. Only the balance becomes a new deduction. I know this is confusing and I'm sorry.

[katrinamjenkins]

you are explaining it very well, thank you.   There is nothing in Box 12 with code P but I don't think t hat changes the situation.  I didn't realize until you explained above that the P Code is to identify payments made for Non deductible/qualifying expenses. All the expenses we had were qualifying/deductible. You are awesome, thank you

[katrinamjenkins]

It is my understanding that if i report the employer reimbursement we received in 2018 with no corresponding expenses that will jsut go straight to income on line 7 of 1040.