What this line means
The total amount your employer — the military — paid or reimbursed you for moving expenses that was not included in Box 1 of your W-2. Tax-exempt military moving entitlements go here: dislocation allowance (DLA), temporary lodging expense (TLE), temporary lodging allowance (TLA), and PPM/DITY reimbursements that were excluded from your taxable wages. This line reduces your gross moving expenses from line 3.
Does this apply to you?
- You received a PPM/DITY reimbursement from the military that was not included in your W-2 Box 1
- You received a dislocation allowance (DLA) that was excluded from taxable wages
- You received temporary lodging expense (TLE) or temporary lodging allowance (TLA) payments
- You received any other tax-exempt military moving reimbursement connected to your PCS order
Easy to overlook
W-2 Box 12, code P shows your excluded reimbursement amount The amount your employer excluded from taxable wages for qualified moving reimbursements appears in Box 12 of your W-2 with code P. This is the number that belongs on line 4. Service members often overlook Box 12 entirely or confuse it with other codes. If code P is blank or missing but you received tax-exempt moving payments, check with your finance office — the reimbursement may have been incorrectly included in taxable wages. 1 IRS Publication 3 — Armed Forces’ Tax Guide
DLA and TLE are reimbursements even though they feel like allowances Dislocation allowance and temporary lodging expense payments are moving reimbursements for tax purposes, even though the military calls them “allowances.” They offset your moving costs on this form. Some service members treat DLA as general income and forget to enter it here, which inflates their deduction on line 5. If it was excluded from your W-2 wages and connected to your PCS, it belongs on line 4. 2 IRS Form 3903 Instructions — Moving Expenses
Watch out for this
If line 4 is larger than line 3, you do not get a negative deduction — you enter zero on line 5. But the excess reimbursement (the amount on line 4 that exceeds line 3) is taxable income. You report it on Form 1040, line 1h as other earned income. This happens most often with PPM/DITY moves where the military reimbursement exceeded what the service member actually spent. Ignoring the excess means underreporting income.
Footnotes
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IRS Publication 3, Armed Forces’ Tax Guide, Chapter 12. https://www.irs.gov/pub/irs-pdf/p3.pdf ↩
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IRS Form 3903 Instructions, Moving Expenses. https://www.irs.gov/instructions/i3903 ↩