Publication 521 |
2001 Tax Year |
Tax Withholding & Estimated Tax
Your employer must withhold income tax, social security tax, and
Medicare tax from reimbursements and allowances paid to you that are
included in your income. See Reimbursements included in income,
later.
Reimbursements excluded from income.
Your employer should not include in your wages reimbursements paid
under an accountable plan (explained later) for moving expenses that
you:
- Could deduct if you had paid or incurred them, and
- Did not deduct in an earlier year.
These reimbursements are fringe benefits excludable from your
income as qualified moving expense reimbursements. Your employer
should report these reimbursements in box 13 of Form W-2.
You cannot claim a moving expense deduction for these
reimbursed expenses (see Reimbursements under How To
Report, later).
Expenses deducted in earlier year.
If you receive reimbursement this year for moving expenses deducted
in an earlier year, and the reimbursement is not included as wages in
box 1 of your Form W-2, you must include the reimbursement on
line 21 of your Form 1040. Your employer should show the amount of
your reimbursement in box 13 of your Form W-2.
Reimbursements included in income.
Your employer must include in your income any reimbursements made
(or treated as made) under a nonaccountable plan, even if they are for
deductible moving expenses. See Reimbursements under
How To Report, later. Your employer must also include in
your gross income as wages any reimbursements of, or payments for,
nondeductible moving expenses. This includes amounts your employer
reimbursed you under an accountable plan (explained later) for meals,
househunting trips, and real estate expenses. It also includes
reimbursements that exceed your deductible expenses and that you do
not return to your employer.
Reimbursement for deductible and nondeductible expenses.
If your employer reimburses you for both deductible and
nondeductible moving expenses, your employer must determine the amount
of the reimbursement that is not taxable and not subject to
withholding. Your employer must treat any remaining amount as taxable
wages and withhold income tax, social security tax, and Medicare tax.
Amount of income tax withheld.
If the reimbursements or allowances you receive are taxable, the
amount of income tax your employer will withhold depends on several
factors. It depends in part on whether or not income tax is withheld
from your regular wages, on whether or not the reimbursements and
allowances are combined with your regular wages, and on any
information you have given to your employer on Form W-4,
Employee's Withholding Allowance Certificate.
Estimated tax.
If you must make estimated tax payments, you need to take into
account any taxable reimbursements and deductible moving expenses in
figuring your estimated tax. For details about estimated tax, see
Publication 505,
Tax Withholding and Estimated Tax.
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