Publication 521 - Moving Expenses - 2002 (Page 12 of 17) in pdf

which you did not adequately account, then only the

Uniform Relocation Assistance and Real Property Ac-

amount for which you did adequately account is consid-

quisition Policies Act of 1970. Do not include in income

ered as paid under an accountable plan. The remaining

any moving expense payment you received under the

expenses are treated as having been reimbursed under a

Uniform Relocation Assistance and Real Property Acquisi-

nonaccountable plan (discussed later).

tion Policies Act of 1970. These payments are made to

persons displaced from their homes, businesses, or farms

Reimbursement of nondeductible expenses. You

by federal projects.

may be reimbursed by your employer for moving ex-

penses, some of which are deductible expenses and some

When To Deduct Expenses

of which are not deductible. The reimbursements received

for the nondeductible expenses are treated as paid under a

If you were not reimbursed, deduct your moving expenses

nonaccountable plan.

either in the year you incurred them or in the year you paid

them.

Nonaccountable plans. A nonaccountable plan is a re-

imbursement arrangement that does not meet the three

Example. In December 2001, your employer trans-

rules listed earlier under Accountable plans.

ferred you to another city in the United States, where you

In addition, the following payments will be treated as

still work. You are single and were not reimbursed for your

paid under a nonaccountable plan:

moving expenses. In 2001 you paid for moving your furni-

ture. You deducted these expenses in 2001. In January

1) Excess reimbursements you fail to return to your

2002, you paid for travel to the new city. You can deduct

employer, and

these additional expenses in 2002.

2) Reimbursements of nondeductible expenses. See

Reimbursed expenses. If you are reimbursed for your

Reimbursement of nondeductible expenses, earlier.

expenses, you may be able to deduct your expenses either

in the year you incurred them or in the year you paid them.

If an arrangement pays for your moving expenses by

If you use the cash method of accounting, you can choose

reducing your wages, salary, or other pay, the amount of

to deduct the expenses in the year you are reimbursed

the reduction will be treated as a payment made under a

even though you paid the expenses in a different year. See

nonaccountable plan. This is because you are entitled to

Choosing when to deduct, later.

receive the full amount of your pay regardless of whether

If you are reimbursed for your expenses in a year after

you had any moving expenses.

you paid the expenses, you may want to delay taking the

If you are not sure if the moving expense reimburse-

deduction until the year you receive the reimbursement. If

ment arrangement is an accountable or nonaccountable

you do not choose to delay your deduction until the year

plan, ask your employer.

you are reimbursed, you must include the reimbursement

Your employer will combine the amount of any reim-

in your income.

bursement paid to you under a nonaccountable plan with

Choosing when to deduct. If you use the cash method

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

of accounting, which is used by most individuals, you can

the total in box 1 of your Form W – 2.

choose to deduct moving expenses in the year your em-

ployer reimburses you if:

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

employer reimburses you under an accountable plan for

1) You paid the expenses in a year before the year of

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

reimbursement, or

reimbursement of a nondeductible expense, it is treated as

paid under a nonaccountable plan and must be included as

2) You paid the expenses in the year immediately after

pay on your Form W – 2.

the year of reimbursement but by the due date, in-

cluding extensions, for filing your return for the reim-

Completing Form 3903. Complete the Distance Test

bursement year.

Worksheet in the instructions for Form 3903 to see

whether you meet the distance test. If so, complete lines

How to make the choice. You can choose to deduct

moving expenses in the year you received reimbursement

1 – 3 using your actual expenses (except, if you use your

by taking the deduction on your return, or amended return,

own car, you can figure expenses based on a mileage rate

of 13 cents a mile, instead of on actual amounts for gas

for that year.

and oil). Enter on line 4 the total amount of your moving

You cannot deduct any moving expenses for

expense reimbursement that was excluded from your

which you received a reimbursement that was not

wages. This excluded amount should be identified with

included in your income.

CAUTION

code P in box 12 of Form W –2.

If line 3 is more than line 4, subtract line 4 from line 3 and

enter the result on line 5 and on Form 1040, line 28. This is

your moving expense deduction. If line 3 is equal to or less

than line 4, you have no moving expense deduction. Sub-

tract line 3 from line 4 and, if the result is more than zero,

include it on Form 1040, line 7.

Page 12

Publication 521 - Moving Expenses - 2002 Page 12

Related Articles

Related forms

Related Categories