1.35- What are Union/Club/Moving expenses and how are they claimed?

Q1: If an employer pays a third party moving service provider after December 31, 2017, for moving one of its employees before January 1, 2018, can the employee exclude the payments from income in 2018?

A1: Yes, if the employee moved in 2017 and would have been able to deduct the expenses for the move if paid by the employee in 2017, the payment of those expenses by the employer after December 31, 2017 is excludable from income as a qualified moving expense reimbursement. Also, the amount is excludable from wages and compensation. For more details, see Notice 2018-75PDF.

Q2: If an employer reimburses an employee after December 31, 2017, for moving expenses incurred before January 1, 2018, does the employee include the payments in income in 2018?

A2: No, if the employee moved in 2017 and would have been able to deduct the expenses for the move if paid by the employee in 2017, the reimbursement of those expenses by an employer after December 31, 2017 is excludable from income as a qualified moving expense reimbursement. Also, the amount is excludable from wages and compensation. For more details, see Notice 2018-75PDF.

Q3: In the situations described in Q1 and Q2 above, does the employer report the moving expense reimbursements in Box 12 of Form W-2 with Code P?

A3: No. As written in the 2018 Form W-2 instructions, Code P is only used to show excludable qualified moving expense reimbursements paid directly to a member of the U.S. Armed Forces. This exclusion for qualified moving expense reimbursements applies only to members of the U.S. Armed Forces on active duty who move per a military order and incident to a permanent change of station.

For more information, see the General Instructions for Forms W-2 and W-3.

Q4: If an employer pays a third party moving service provider or reimburses an employee after December 31, 2017, for moving services or moving expenses incurred for a move that began before December 31, 2017, but wasn’t completed until after December 31, 2017, does the employee include the payments or reimbursements in income in 2018?

A4: The employee can exclude payments or reimbursements from income as qualified moving expense reimbursements only to the extent that:

• The employee would have been able to deduct them if paid by the employee in 2017, and

• They’re for services provided or expenses incurred before January 1, 2018.

For example, if an employee moves household goods in 2017 but doesn’t travel to the new place of employment until 2018, the employee may exclude payment or reimbursement of the expenses for the movement of the goods but not the employee’s travel expenses.