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Financial Planning / Tax Strategies


Subject:  Re: Moving expenses tax deduction Date:  1/5/2001  11:03 AM
Author:  TMFExRO Number:  43950 of 127613

10 or 15 years ago, reimbursements of moving expenses were wages, because they had FICA taken out of them. The law got changed when I wasn't looking, I think, and I was surprised one year to see moving expenses as an adjustment to income on form 1040.

Phil, just as a matter of pedantry, would reporting of moving expenses as wages be left over from that time and sort of a legacy of forgetfulness in HR, or are there reasons why a company might want to record such expenses in different ways? Interested patries don't really wish to know, it's merely idle curiosity for me.

This law has been one of Congress' favorite playgrounds, and it's really hard to keep up. The current version gives the employer a choice between an accountable or nonaccountable plan. If the employer chooses an accountable plan, reimbursement for allowable expenses is not wages, but reimbursement for unallowable expenses is. In a nonaccountable plan, all reimbursement is wages and the employee has to figure it out. In short, it's a mess either way, but a nonaccountable plan may be more appealing to the employer because it's simpler.

Phil Marti
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