Page 301 - Small Business IRS Training Guides

Prior Tax Law

Qualified Moving Expense Reimbursement: IRC 132(g) applies to any amount given to an employee, directly or

indirectly, as payment for, or a reimbursement of, moving expenses. Only those expenses that the employee could deduct
under IRC 217, if the employee had paid or incurred them, are excludable.

Expenses that qualify under this exclusion are limited to reasonable expenses for:

• Moving household goods and personal effects from the former home to the new home, and

• Traveling expenses, including lodging, from the former home to the new home.

Amounts which are excluded from gross income under IRC 132 are also excluded from Federal Insurance Contributions

Act (FICA) taxes (both social security and Medicare) and Federal income tax withholding. IRC 3121(a)(20) and
IRC 3401(a)(19).

Qualified amounts paid by the employer directly to a third-party, such as a moving company, are not reported on

Form W-2. Qualified amounts paid directly to the employee by the employer are reported on Form W-2, Box 12, Code P.

Any other non-qualified expenses paid by the employer on behalf of the employee are includible as compensation subject

to employment taxes. Examples of nonexcludable expenses include:

• House-hunting trips,

• Storage of goods,

• Closing costs, and

• Interest-free or low-interest loans when an employee’s former home has not sold.

73233-102 11048-3 Tax Cuts and Jobs Act