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How to generate Form 3903 and clear diagnostic 3440 in ProConnect Tax

by ProConnect Tax Online Updated 7 months ago

Due to the Tax Cuts and Jobs Act, the moving expense deduction is only allowed on federal returns for members of the armed forces. This article will help you enter moving expenses for clients who still qualify, as well as certain states that still allow the deduction.

To generate Form 3903:

  1. Go to Input ReturnDeductionsMoving Expenses 3903.
  2. Select whether the Form 3903 applies to the Taxpayer, Spouse, or Joint.
  3. Check the box for Armed forces move due to permanent change of station, if applicable. This entry is mandatory for the federal deduction for tax year 2018 and newer.
  4. Enter the Miles from old home to new work place and the Miles from old home to old work place.  
    • The program uses these amounts to perform the distance test for Form 3903. To meet the distance test, the taxpayer's new principal work place must be at least 50 miles farther from the old home than the taxpayer's old work place.
  5. Enter the actual cost of moving and storing household goods and personal effects in Transportation and Storage of Goods
    • Include amounts reimbursed to the taxpayer if they weren't included on Form W-2 as wages. This amount prints on Form 3903, line 1.
  6. Enter any Lodging and Travel expenses excluding meals.
  7. Enter the amount of Other allowance or reimbursements not on Form W-2, if applicable.

Resolving diagnostic Ref. 3440 Form W-2 sent to invalid Form 3903

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.

If the taxpayer did move during the year the W-2 needs linked to the 3903:

  1. Once you have entered the information needed to generate the 3903
  2. Go to Input ReturnWages, Salaries, Tips (W-2)
  3. Scroll down to Box 12.
  4. In the field If "P" above, move name or number (3903) select the 3903.
  1. Go to the section, Deductions, and then go to the screen, Moving Expenses (3903).
  2. Select whether the Form 3903 applies to the Taxpayer, Spouse, or Joint.
  3. Enter the Miles from old home to new work place and the Miles from old home to old work place. The program uses these amounts to perform the distance test for Form 3903. To meet the distance test, the taxpayer's new principal work place must be at least 50 miles farther from the old home than the taxpayer's old work place.
  4. Enter the actual cost of moving and storing household goods and personal effects in Transportation and Storage of Goods. Include amounts reimbursed to the taxpayer if they are not included on Form W-2 as wages. This amount prints on Form 3903, line 1.
    • Note: If the taxpayer is claiming only storage costs for a move outside the U.S. in an earlier year and the amount paid by the employer is included in Form W-2, box 1, leave this field blank and enter the storage fees paid by the taxpayer in the field, "Storage Fees (during absence from U.S. only)".
  5. Enter any Lodging and Travel expenses excluding meals.
    • Note: Form W-2 box 12 amounts entered with code P in the screen, Wages, Salaries, Tips, (W-2), are carried to Form 3903 automatically. To override the program's automatic calculation of these reimbursements from Form W-2 input, enter an amount in the field,  Reimbursements Not Included in Wages [Override] in the screen, Moving Expenses (3903). If these reimbursements exceed the current year moving expenses, the excess carries to the wages line of Form 1040.
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