Relocation allowance tax
Hi,
I'm in the process of relocating back to the US via an inter-company transfer. My official start date/move to US payroll is January 1st. I will be going to the US in December and will spend time getting a house etc. Next week the company is transferring a relocation allowance lump sum into my US bank account and they've said that it will be taxed at source before it's paid to me. I'm a bit confused as to how exactly they will tax this at source. How will they calculate the rate of tax? Will they also deduct Social and Medicare? Does this mean that I'll effectively be on the payroll from next week meaning I'll need to submit a US tax return for 2017? Any advice is greatly appreciated. Thanks! |
Re: Relocation allowance tax
They'll deduct tax starting with your first pay check in January I would expect.
Yes, they will deduct Social Security and Medicare payments. |
Re: Relocation allowance tax
Why did you not negotiate that it should be grossed up?
|
Re: Relocation allowance tax
They've spent a lot and it seemed a step too far!
I still don't really get why I need to submit a tax return and pay medicare/social etc. when my end date in the UK isn't until December 31st and my start date is January 1st. It's not like I've been in the country and benefiting from anything. |
Re: Relocation allowance tax
Originally Posted by mbox
(Post 12383371)
They've spent a lot and it seemed a step too far!
I still don't really get why I need to submit a tax return and pay medicare/social etc. when my end date in the UK isn't until December 31st and my start date is January 1st. It's not like I've been in the country and benefiting from anything. |
Re: Relocation allowance tax
Originally Posted by mbox
(Post 12383371)
They've spent a lot and it seemed a step too far!
Originally Posted by mbox
(Post 12383371)
I still don't really get why I need to submit a tax return and pay medicare/social etc. when my end date in the UK isn't until December 31st and my start date is January 1st. It's not like I've been in the country and benefiting from anything.
Long answer - I hope as part of your relocation your company is offering assistance with tax returns (in both countries for transition years)! |
Re: Relocation allowance tax
+1 for asking it to be grossed up. They may well be waiting for you to ask for it. Don't ask, don't get and in the grand scheme of the costs of relocating, it isn't a huge amount but it will make a difference to you.
|
Re: Relocation allowance tax
Originally Posted by mbox
(Post 12383371)
They've spent a lot and it seemed a step too far!
I still don't really get why I need to submit a tax return and pay medicare/social etc. when my end date in the UK isn't until December 31st and my start date is January 1st. It's not like I've been in the country and benefiting from anything. |
Re: Relocation allowance tax
Originally Posted by mbox
(Post 12382994)
Hi,
I'm in the process of relocating back to the US via an inter-company transfer. My official start date/move to US payroll is January 1st. I will be going to the US in December and will spend time getting a house etc. Next week the company is transferring a relocation allowance lump sum into my US bank account and they've said that it will be taxed at source before it's paid to me. I'm a bit confused as to how exactly they will tax this at source. How will they calculate the rate of tax? Will they also deduct Social and Medicare? Does this mean that I'll effectively be on the payroll from next week meaning I'll need to submit a US tax return for 2017? Any advice is greatly appreciated. Thanks! |
Re: Relocation allowance tax
Originally Posted by BigK
(Post 12383744)
Why wouldn't they just treat this as a straight expense? Why treat it like salary? Makes no sense
|
Re: Relocation allowance tax
Originally Posted by petitefrancaise
(Post 12383753)
Because it's a taxable benefit. They are paying it to him for him to spend (or not) as he wishes.
|
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