OK So before I get shot down I know this has been discussed a lot, but because it has been discussed a lot there is lots of conflicting info around... hence my questions to try and clarify the situation.

We've been here in CA about 5 months and we are looking at a UK return. Not because we want to go back (we don't) but purely because of the cost of living here in Southern California being so high, coupled to a single salary and 3 kids.

I am trying to forward plan the costs to stay here and one area is relocation costs, and which ones I will get taxed on. I want to find this out so that I can budget monthly.

The company paid several bills directly:
- Recce trip flight/hotel/car ~$3k
- Shipping/Removal company ~$10k
- One way flights ~$5k

They also put $10k into my US bank account, most of which went to the landlord of the rental house for deposit and first month rent.

Can anyone please tell me which one(s) of these will be taxable?

Thanks

I really have no idea, but I would say all those things are taxable, the question is - is the employer paying the tax?

The only monies that are taxable is the direct deposit into your bank account of $10k USD.

HTH

Check your payslips. Your employer will hopefully have already grossed up (included the tax) and paid the relevant tax withholding from your paycheck. If that isn't clear, check your relocation agreement and contact your HR department.

Recce trip?

Heh, well..if they could justify it under those terms as an expense then sure!

To the OP: when I moved over I made sure my employer paid as many invoices directly as possible to reduce any tax liabilities I may have incurred.

maybe these?

Is the employer going to want some of this (relocation costs, not fudge) back if he goes after 5 months?

Thanks for the responses.
The recce trip was to look for accommodation in advance of us moving over. I.e to find a rental in 2 days (which I did).

There is no mention of grossing up in my agreement. An oversight on my part.

I feel a bit more comfortable thinking it's "only" tax on 10k.
I am only locked in regarding the relocation payment till June so I will not have a problem having to pay stuff back if I do have to go back.

I don't think you can deduct the recce.

http://www.irs.gov/publications/p521...link1000203491

"Nondeductible Expenses

You cannot deduct the following items as moving expenses...


Pre-move househunting expenses..."

Thanks for the link Sally

Did your employer pay/reimburse these relocation costs? If so they should add them to your w2 for the year and you will pay the tax when your fill out your tax return.

They should calculate how much is taxable so there is nothing you need to do. It will most likely result in a reduction in your tax refund, or you may have to pay some extra tax.

Eh? None of the relocation costs are taxable if paid directly by the employer! Please stop giving massively erroneous advice.

I think they are taxable as income and he can deduct the allowable items. That's why some people get the amounts grossed up.

Topic 514, IRS covers this:

"If your employer reimbursed you or gave you an advance or allowance for your employee business expenses that is treated as paid under an accountable plan, the payment should not be shown on your Form W-2 (PDF) as pay. You do not include the payment in your income, and you may not deduct any of the reimbursed amounts."

The advice given by Catmo is seriously in error and should not be taken as informed opinion.