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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Moving expenses, my company paid to relocate me.

Resolved Question:

My company paid to relocate me. There was Tax assistance provided to me, but that added the tax assistance to my income. Is anything deductible by me?

Submitted: 10 years ago.
Category: Tax
Expert:  RD replied 10 years ago.

Since the moving expenses were reimbursed by your company, the relocation expenses would not be deductible.

What do you mean by tax assistance?

Customer: replied 10 years ago.

Some of the relocation expenses are taxable by the Feds. In turn, the company, adds a tax assistance amount, but includes it as income. All of the relocation expense was added to my income, W-2 box 1, but the tax assistance was created to offset the taxes owed.

Expert:  RD replied 10 years ago.

In that case, since the relocation expense is included on your W-2 box 1 you will be able to get a deduction for moving expense as an adjustment on Line 26 of Form 1040

Use Form 3903 to figure your moving expense deduction.
Deduct your moving expenses on line 26 of Form 1040. The amount of moving expenses you can deduct is shown on line 5 of Form 3903.

You can deduct the reasonable expenses of:
1. Moving your household goods and personal effects (including in-transit or foreign-move storage ex-
and
2. Traveling (including lodging but not meals) to your new home.

You will not be able to get a deduction for Tax Assistance.

Please note: This advice is based on limited facts provided by you. Since it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.

Customer: replied 10 years ago.

The total cost of the relocation was $13,500, this was added to my income. $3,000 was for transportation of household goods, not added to W-2 and paid to a 3rd party (movers) by the company. In that $13,500, $4,000 tax money was given to me to offset the taxes. Now it seems like I am paying tax on the taxes given to me to offset the required tax in accordance with moving. If in a 28% tax bracket, I would think that I should be able to deduct 28% of the $4000, otherwise I'm paying tax on the tax.

Expert:  RD replied 10 years ago.
Unfortunately yes. You cannot get a deduction for $4000 tax money given to offset the taxes.

For moving expenses, you will have to fill up Form 3903 and include all the expenses incurred including $3000 paid for transportation of household goods and show that amount of $3000 as a reimbursement from Employer. You will get a deduction for the balance paid towards moving.

Please note: This advice is based on limited facts provided by you. Since it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.
Customer: replied 10 years ago.
I have form 3903. I am using Turbo Tax (sorry) to do my taxes. Line 1,I enter the $0,the $3000 was paid by the company and not me. Line 2, I enter $0. Line, 3 is now a sum of 1 & 2 for $0. Line 4, I enter $80, Code P in box 12 on W-2. Is Line 3 more than Line 4? No, You cannot deduct jack ha ha! I guess I was trying to get out of paying tax on tax.
Expert:  RD replied 10 years ago.
Since the company paid $3,000 directly, I would think this is the amount showing up with Code P in box 12 on W-2.

On Line 1, you should enter the total cost paid to pack, crate, store and transport
household goods and personal effects.(include $3000 paid by your employer)

On Line 2, Travel and lodging from old place to new place for you and members of your household.

On Line 4 you will enter $3,000 paid by the company.

Hope this helps!! :-)

Please note: This advice is based on limited facts provided by you. Since it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.
Customer: replied 10 years ago.
The P code only showed $80 on the W-2. If this is is the case, are you saying I can deduct $3000 as a moving expense, even though the company paid $3000 directly to the movers? This amount was not included in my W-2 Box 1.
Expert:  RD replied 10 years ago.
Well in that case you might want to contact your employer and check with him and try to get this corrected

or alternatively, you will not include $3,000 on Line 1 and Line 4 but you can include $80.
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