Tax question related to employer reimbursed moving expenses: Do all reimburse have to be reflected on my W-2?

Question

My moving expenses were "grossed-up" and shown as part of my wages so that the after tax amount equaled the costs paid out on my behalf to the moving company, closing costs, and realtor fee. Is there a portion of these reimbursements that can be shown as something other than wages to reduce my net income? These reimbursements have made me ineligible for the child tax credit ($2,000) and has made my 2006 Roth IRA contribution ineligible for investment in a Roth IRA.

Answer 1

Moving expenses appearing in Box 1 of your W-2 will not disqualify you from the child tax credit or Roth, since they can be deducted "above the line" and do not figure into your AGI which is used to determine eligibility.

Since your payments also included closing costs and realtor fees, which are not deductible, those have to be included in your wages in Box 1. Any extra payments to you to cover taxes must also be included as wages in Box 1.

What you can do now is use Form 3903 to deduct your moving expenses (but not the costs related to your house purchase). This will reduce your AGI to the level it would have been if the moving expenses had not appeared on your W-2.

Answer 2

If your moving costs were included in your gross income on your Form W-2, they are fully deductible. File Form 3903 with your return to claim the moving costs.

Answer 3

Nope. You only get the tuition credit if you paid the tuition and were not reimbursed for it. By the way, the employer's tuition reimbursement is considered taxable income.