Chapter 58
MOVING EXPENSE REIMBURSEMENT
LEARNING OBJECTIVES:

Have a basic understanding of moving expense reimbursements
REVIEW:
This chapter discusses the employee moving expense reimbursement.
Advantages and disadvantages of this recruiting tool are covered first. The tax
implications section focuses on Internal Revenue Service tests for deductibility.
ERISA (Employee Retirement Income Security Act) does not come into play with
moving expense reimbursement. After a reference to IRS Publication 521, the
chapter closes with a question and answer section.
CHAPTER OUTLINE:
I. What Is It?
II. When Is It Indicated
III. Advantages
IV. Disadvantages
V. Tax Implications
VI. ERISA and Other Regulatory Implications
VII. Where Can I Find Out More About It?
VIII. Questions and Answers
IX. Chapter Endnotes
FEATURED TOPICS:
Moving expense reimbursement
1
Chapter 58
CFP® CERTIFICATION EXAMINATION TOPIC: NONE
COMPETENCY:
Upon completion of this chapter, the student should be able to:
1.
Have a basic understanding of moving expense reimbursements
DISCUSSION:
1. Discuss reasons why an employer might want to reimburse an employee’s
moving expenses.
2. Discuss IRS requirements for moving expense deductibility.
KEY WORDS:
Moving expense reimbursement
Distance test
Time test
Types of deductible expenses
QUESTIONS:
1. Which of the following advantages and disadvantages apply to moving
expense reimbursement?
(1) it can be a tax-free form of compensation
(2) even with a moving expense reimbursement, the employee can still
deduct expenses for house hunting
(3) employers have complete flexibility in plan design
(4) the new house must be at least 75 miles farther away
a.
b.
c.
d.
(1) and (3) only
(2) and (4) only
(1), (2), and (3) only
(2), (3), and (4) only
Chapter 58, p. 415
Chapter 58
2. Which of the following are requirements that must be met in order for an
employee to deduct moving expenses?
(1) distance test
(2) reasonableness of compensation test
(3) time test
(4) types of expenses limitation
a.
b.
c.
d.
(1) and (2) only
(2) and (3) only
(3) and (4) only
(1), (3), and (4) only
Chapter 58, pp. 415, 416
3. For how long must an employee work full-time at the new job in order to
deduct moving expenses?
a.
b.
c.
d.
48 weeks in the first 24 months
45 weeks in the first 24 months
39 weeks in the first 12 months
24 weeks in the first 12 months
Chapter 58, p. 416
4. Which of the following are considered to be nondeductible moving expenses?
(1) loss on sale of the old home
(2) reinstalling carpets or draperies
(3) mortgage penalties
(4) traveling to the new home
a.
b.
c.
e.
(1) and (3) only
(1), (2), and (3) only
(2), (3), and (4) only
(1), (2), (3), and (4)
Chapter 58, p. 416
ANSWERS:
1. a
2. d
Chapter 58
3. c
4. b