Final answer:
The taxable portion of moving expenses is reported in Boxes 1, 3, and 5 of the W-2, while the non-taxable portion is indicated in Box 12, coded 'P'.
Step-by-step explanation:
Moving expenses are reported on Form W-2 to differentiate between taxable and non-taxable portions of those expenses. According to the guidelines, the taxable portion of moving expenses is reported in Boxes 1, 3, and 5 of the W-2 form. This includes wages, tips, and other compensation that are subject to federal income, social security, and Medicare taxes.
On the other hand, any non-taxable portion of moving expenses that is paid by the employer and considered an excludable fringe benefit is reported in Box 12, and it is coded with the letter 'P'. This code on the W-2 indicates the amount of expenses that is excluded from the employee's income and is not subject to tax, as per IRS guidelines.