Tax Help
#16
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If they do the gross-up correctly (mine did) they will pay the tax on the $3000 as well. And the tax on the tax on the $3000 etc etc. A nice geometric (?) progression, in fact, to calculate correctly.
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#17
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IOW they figure the extra amount needed to cover the taxes on the relo income AND the taxes on the extra amount!
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#18
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No, because that's not enough. Paying you the amount for "taxes on the extra amount" will in itself generate more taxable income. This will produce a (negative) geometric progression trending towards zero, the sum of which is the gross up amount they should be paying.
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#19
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Upshot is I seem to have a deal where my own exposure will be very limited.
I now of course need to find a good accountant as some things like my daughters school fees etc or some such seem to be a partial deductable etc etc.
As I was only here for 3 months in 2007 I do not know if that 'part' year has an impact.
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#20
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For simplicity's sake.... relocation allowance = 10,000 payable as a lump sum, this amount is grossed up and treated like salary. So, it may be that - depending on the city/county/state/country, the figure is actually 19000.
So, if the employee's usual annual earnings is 100,000 (keeping it simple & round numbers), then for the tax year in which he/she moved, that annual earnings is shown as 119,000.
(Of course there could be other implications like ROTH IRA eligibility etc....)
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#21
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<<removed>>
Last edited by NC Penguin; Feb 9th 2008 at 10:31 am. Reason: Please send PM to Tracym for info
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