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IRS Provides Clarification on Moving Expense Reporting for the 2018 Form W-2

The IRS has provided guidance for reporting moving expenses incurred in 2017 but paid or reimbursed in 2018 on the 2018 Form W-2.

The tax-free reimbursement and deductibility of moving expenses was suspended under the Tax Cuts and Jobs Act, except for members of the Armed Forces of the United States on active duty who move pursuant to a military order or permanent change of station.

While this change doesn’t prohibit employers from paying employees’ moving expenses, it does make these payments taxable to the employee. (You can read more about that here.)

Prior to 2018 (and in 2018 for the aforementioned active duty military members), moving expenses were reported on Form W-2 in Box 12 using code P.

In its recent guidance, the IRS noted that:

Some employers have reported nontaxable reimbursements for 2017 moves and other reimbursements under code P for 2018. The only amounts to be reported under code P for 2018 are excludable moving expense reimbursements paid directly to a member of the U.S. Armed Forces who moves per a military order and incident to a permanent change of station. Employers should not report any other amounts under code P for 2018.

If your organization reported an amount in Box 12, code P on the 2018 Form W-2 that should not have been, the IRS says that you do not need to file corrected forms with the SSA or the IRS. You also do not need to supply corrected 2018 forms to employees. You can tell your employees to disregard that amount and omit it when entering their Form W-2 information into tax return preparation software. Similarly, if they use the services of a paid tax preparer, that preparer should omit entering this information into tax return preparation software.

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