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What is Moving Expense Reimbursement?

Moving expense reimbursements are benefits offered to the employees as long as the expenses are qualified for reimbursements and these are tax-free fringe. The  deductible moving expenses are tax-free to employees and are paid by the employer.

These include:

  • Transportation and storage costs.
  • Travel expenses.

Every moving expense reimbursement given to an employee or on their behalf is considered taxable income for the employee and will be shown on their Form W-2. Federal income tax, state income tax, and social security taxes, as well as Medicare taxes, must be withheld from taxable reimbursements.

Is Moving Expense Reimbursement Taxable?

As moving expense reimbursement is offered in form of a reimbursement these are non-taxable income. Income tax on relocation allowance is exempt from certain taxes because of additional expenses incurred by relocating to a new place. (which is bear by the company). Also, no TDS is required to be deducted from it.

There is no specific limit set to moving expense reimbursement as in how much it needs to be provided by the employer.

When you are filing for income tax you need to mention these expenses for them to get exempted.

Why are Moving Expenses No Longer Deductible?

There are some moving expenses that are no longer deductible because these are personal or professional costs you cannot subtract from your gross income.

You can get reimbursement on parking fees and tolls you paid while moving no matter what method you use to figure out your expenses.

Non-deductible expenses are:

  • Costs of repairs and maintenance.
  •  insurance.
  • Depreciation for your car.

 If you’re willing to claim these deductions, you ought to keep good documentation of all the expenses that may qualify for reimbursement.

Also, See: Wage Garnishments

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