Relocation Costs Directly Paid - tax implications?
#1
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Thread Starter
Joined: Feb 2013
Location: Mission Viejo, CA
Posts: 255
Relocation Costs Directly Paid - tax implications?
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
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
#2
Re: Relocation Costs Directly Paid - tax implications?
I really have no idea, but I would say all those things are taxable, the question is - is the employer paying the tax?
#3
Banned
Joined: Apr 2013
Posts: 5,154
Re: Relocation Costs Directly Paid - tax implications?
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?
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?
HTH
#4
Re: Relocation Costs Directly Paid - tax implications?
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
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
#8
Lost in BE Cyberspace
Joined: Jan 2008
Posts: 41,518
Re: Relocation Costs Directly Paid - tax implications?
Is the employer going to want some of this (relocation costs, not fudge) back if he goes after 5 months?
#9
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Thread Starter
Joined: Feb 2013
Location: Mission Viejo, CA
Posts: 255
Re: Relocation Costs Directly Paid - tax implications?
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.
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.
#10
Lost in BE Cyberspace
Joined: Jan 2008
Posts: 41,518
Re: Relocation Costs Directly Paid - tax implications?
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.
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.
http://www.irs.gov/publications/p521...link1000203491
"Nondeductible Expenses
You cannot deduct the following items as moving expenses...
Pre-move househunting expenses..."
#11
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Thread Starter
Joined: Feb 2013
Location: Mission Viejo, CA
Posts: 255
Re: Relocation Costs Directly Paid - tax implications?
Thanks for the link Sally
#12
Just Joined
Joined: Nov 2013
Posts: 17
Re: Relocation Costs Directly Paid - tax implications?
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.
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.
#13
Banned
Joined: Apr 2013
Posts: 5,154
Re: Relocation Costs Directly Paid - tax implications?
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.
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.
#14
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Joined: Jan 2008
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Re: Relocation Costs Directly Paid - tax implications?
#15
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Joined: Apr 2013
Posts: 5,154
Re: Relocation Costs Directly Paid - tax implications?
"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.