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Relocation tax

Relocation tax

Old Jan 4th 2018, 8:52 pm
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Default Relocation tax

Hi,

We are looking to move to Maryland in June and have just been given an offer letter and relocation package.

I understand that relocation is taxable and wondered if anyone had experience of this and could shed any light on what is and isn't subject to tax?

For example, the transportation of our goods is to be taken care of by the company, along with airfares, temporary accommodation etc. We are also being given a fixed $ amount to cover replacement of electronics, rent, deposits, etc.

What could be taxed and roughly what % could this be?

I am enquiring about the amount being 'grossed up' but am unsure of what we could be taxed on if this is not agreed.

Thanks!
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Old Jan 4th 2018, 9:33 pm
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Default Re: Relocation tax

You can't claim a tax deduction because the law has changed. Ask your employer how they plan to handle the change in the law.
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Old Jan 4th 2018, 9:48 pm
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Default Re: Relocation tax

So this means......we would be taxed on the full relocation? If that's the case, how much would this be?
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Old Jan 4th 2018, 9:50 pm
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Default Re: Relocation tax

Figure 25%-ish. The employer should really round it up about that amount to compensate.

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Old Jan 4th 2018, 10:00 pm
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Default Re: Relocation tax

That's helpful! Thanks!
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Old Jan 4th 2018, 11:07 pm
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Default Re: Relocation tax

Originally Posted by Wherewillweendup View Post
So this means......we would be taxed on the full relocation? If that's the case, how much would this be?
Depends on what the marginal tax rate (federal and potentially state) for your US income is projected to be in 2018. Additionally, bear in mind that any "gross up" itself becomes taxable income and should be figured into the calculation by your employer.

Last edited by Giantaxe; Jan 4th 2018 at 11:12 pm.
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Old Jan 4th 2018, 11:42 pm
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Default Re: Relocation tax

Originally Posted by Wherewillweendup View Post
Hi,

We are looking to move to Maryland in June and have just been given an offer letter and relocation package.

I understand that relocation is taxable and wondered if anyone had experience of this and could shed any light on what is and isn't subject to tax?

For example, the transportation of our goods is to be taken care of by the company, along with airfares, temporary accommodation etc. We are also being given a fixed $ amount to cover replacement of electronics, rent, deposits, etc.

What could be taxed and roughly what % could this be?

I am enquiring about the amount being 'grossed up' but am unsure of what we could be taxed on if this is not agreed.

Thanks!
Look up IRS publication 521 on moving expenses.

Please note that major tax legislation was just enacted and nobody really understands it.

There are really two parts to your question - first, is the reimbursement taxable income? The nature of your question indicates it is. But there may be a way to avoid this.

The second question is whether or not you will be able to take an itemized deduction for the moving expenses.

I have no idea if Maryland has a state income tax.

You should look into this carefully.
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Old Jan 10th 2018, 9:40 pm
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Default Re: Relocation tax

Sorry for the delay and thanks for the replies. Will be looking into this carefully over the next few weeks with my employer! Fingers crossed we won’t end up out of pocket
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