Certified Relocation Professional (CRP) Practice Exam

What moving expense must be included in the transferee's income if reimbursed by the company?

1. Meal expenses incurred as part of the family's temporary living

2. Lodging expenses during en route travel

3. Shipping the personal effects of the transferee's spouse

4. Storage in transit charges for two weeks

The correct answer is: Meal expenses incurred as part of the family's temporary living

When a company reimburses moving expenses, the tax implications can vary based on the nature of the expense. In the context of the options provided, meal expenses incurred as part of the family's temporary living must be included in the transferee's income if reimbursed by the company. This is because meal expenses are considered a personal expense and therefore taxable under IRS guidelines. In contrast, moving-related costs like lodging during en route travel, shipping personal effects, and storage in transit may not necessarily result in taxable income for the transferee when reimbursed. These expenses are often classified as qualified moving expenses, which can be excluded from the transferee's taxable income under specific conditions outlined by the IRS. Overall, understanding which moving expenses are considered taxable is crucial for accurate reporting and compliance, especially when a company handles the relocation costs.