This exclusion applies to any amount you give an employee, directly
or indirectly (including services furnished in kind), as a payment
for, or a reimbursement of, moving expenses. You must make the
reimbursements under rules similar to those described in chapter 13 of
Publication 535
for reimbursements of expenses for travel, meals, and
entertainment under accountable plans.
This exclusion applies only to reimbursements of moving expenses
that the employee could deduct if he or she had paid or incurred them
without reimbursement. However, it does not apply if the employee
actually deducted the expenses in a previous year.
Deductible moving expenses include only the reasonable expenses of:
- Moving household goods and personal effects from the former
home to the new home, and
- Traveling (including lodging) from the former home to the
new home.
Deductible moving expenses do not include any expenses for meals.
For more information on deductible moving expenses, see Publication 521,
Moving Expenses.
Employee.
For this exclusion, treat the following individuals as employees.
- A current employee.
- A leased employee who has provided services to you on a
substantially full-time basis for at least a year if the services are
performed under your primary direction or control.
Exception for S corporation shareholders.
Do not treat a 2% shareholder of an S corporation as an employee of
the corporation. A 2% shareholder is someone who directly or
indirectly owns (at any time during the year) more than 2% of the
corporation's stock or stock with more than 2% of the voting power.
Exclusion from wages.
You can generally exclude qualifying moving expense reimbursements
you provide to an employee from the employee's wages. If you paid the
reimbursements directly to the employee, report their amount in box 12
of the employee's 2001 Form W-2 with the code P. Do not report
payments to a third party for the employee's moving expenses or the
value of moving services you provide.
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