How to resolve Lacerte diagnostic ref. 3440 Form W-2 sent to invalid Form 3903

This article will help resolve the following diagnostic:

• Form W-2 #X: Excludable moving expense reimbursements sent to invalid Form 3903. (Ref. #3440)

If the taxpayer didn't move, and the W-2 is in error, contact the employer to get a corrected W-2.  If that isn't possible, refer to the following steps, but in step 3, only enter Miles from old home to new work place and Miles from old home to old work place, and enter the same number for both.  This will clear the diagnostic without generating Form 3903.

To enter moving expenses linked to wages in Screen 10:

1. Select a client in the Clients list.
2. Select Screen 27, Moving Expenses (3903).
3. Enter all applicable expenses for the allowable deduction in Form 1040.
4. Go to Screen 10, Wages, Salaries, Tips.
5. Enter all W-2 information, including moving expenses reimbursed by employer in Box 12 code P.
6.  To link the entries in Screen 27 to the W-2, select the name or number of the move in If "P" above, move name or number (3903).

Future changes for tax year 2026

For tax years beginning after December 31, 2025, the One Big Beautiful Bill act will make changes to the Deduction for Moving Expenses extending and modifying the limitation on deduction and exclusion for moving expenses. This will permanently extend the limitations. These changes will go into effect in tax year 2026.