Common use of Taxability of Reimbursement Clause in Contracts

Taxability of Reimbursement. Certain reimbursements for Qualified moving expenses are excluded from income as Qualified fringe benefits under IRS Section 217. Non- Qualified reimbursed expenses are wages subject to withholding and payroll taxes. Expenses listed under g. (below) have been classified as Qualified moving expenses (not reportable) or as Non-Qualified (reportable and subject to withholding) expenses. Although Qualified moving expenses that are reimbursed to the employee are not reportable as income on the employee’s W-2, they must be reported in box 12 on the employee’s W-2. Qualified moving expenses paid directly to a third party (mover) no longer need to be reported on the employee’s W-2.