Certified Relocation Professional (CRP) Practice Exam

According to Federal Tax Law, when can company moving expense reimbursements be excluded from income?

1. 30 days of in-transit storage and moving the automobile

2. Home purchase closing costs on lodging during temporary living

3. 15 days of in-transit storage for household goods

4. Temporary living expenses for 30 days during house hunting

The correct answer is: 30 days of in-transit storage and moving the automobile

The correct choice identifies that company moving expense reimbursements can be excluded from income when they pertain to 30 days of in-transit storage and moving the automobile. Under the provisions of the Federal Tax Law, certain moving expenses associated with the relocation process can be excluded from the employee's gross income. This particular option highlights portions of the moving process that are expressly recognized as qualified expenses that do not need to be taxed, specifically addressing the storage of personal belongings during transit and costs related to moving a vehicle. This option effectively reflects the IRS guidelines surrounding the tax treatment of moving reimbursements, emphasizing the importance of logistics, such as in-transit storage and transportation of vehicles, that directly relate to an employee's moving journey. These allowances are designed to facilitate the employee’s transition without imposing additional tax burdens. In contrast, the other choices present specific situations that do not meet the criteria defined under Federal Tax Law for exclusion from income, either because they fall outside the recognized expenses or do not adhere to the stipulated time frames for reimbursement to qualify for such exclusion.