I got the relocation lump sum $12K in 2005 and reported as income in table 1 w2. In 2005 tax return, I claim my shipment and moving fee as moving deduction in 3903. But today Tax audit said it is not right because my employee had paid me for moving expense in lump sum. Is it right? Thanks for answer

You use Form 3903 is your move to start work at a new principal place of work.
May be in your case, you needed to claim travel expenses, which is itemized deduction. Travel expenses include transportation, lodging and meals. Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 9 of Schedule A (Form 1040NR). Your U.S. Tax Return: Itemized Deductions

Tax Audit is WRONG!

If the reimbursement you receive from your employer is taxed as compensation (which is indicated because you said the $12,5K was reported in Box #1 of the 2005 Form W-2), then you have every right to claim your moving expenses on Form 3903.

Thank you both for your great answer. My employer paid my lump sum to cover my moving expense, which was reported in W-2 Box#1, not Box12-p; I believe I have right to claim my moving expenses on Form 3903. Do you know how to deal with this tax audit? By the way, if tax return 2005 something wrong was found today (over IRS 3/4 years period for audit), do I have responsobility to pay back or get refund? Thanks for answer ahead

Chuckx:

Unfortunately, it is too late to amend your 2005 tax return and get any refund, because you have passed the three-year stature of limitations for amending and claiming such a refund.

However, on the bright side, if you have not yet been audited, your chance of being audited is virtually non-existent. Right now, the IRS is finishing their review of the 2007 returns and starting on 2008. Your 2005 return has passed review and will not be addressed unless someone brings it to the attention of the IRS.

Thank you very much for your answer

Glad to help!