texasjan

On an expat assignment and the rent, utilities, car, medical the company pay are counted as 'wages' on the w2. The company have now amended w2 to also include the tax they pay to the IRS. So when calculating tax to be paid, tax will be due on tax? Just wanted to check other experiences?

Pulaski

Almost anything you are paid, including liabilities discharged for you, are taxable income in the US. If the employer intends to entirely discharge your liability/ cover your expense, they would need to "gross-up" the amount to allow for what is later payable in taxes. Roughly speaking they should have given you 35% more than the tax bill, so that you'd have 35/135 of the sum to pay the taxes.

rebs

Our experience of 'grossing up' was similar to you describe - the first year we submitted tax returns we had to pay tax on some removal expenses that the company paid. The company paid that tax, then the following year that amount was considered as income (and so taxable) and again, the company paid that tax.

durham_lad

This was my experience as well when I came over on a company move.

Michael

Benefits such as medical, life insururance, etc. are normally not taxable as long as they follow US plans that are considered tax free by the IRS government.

However if the company reimburses you for benefits purchased on the open market, then those would likely be taxable.

Giantaxe

Strictly speaking, tax will be due on the payment your company made to you to cover your tax liabilities.

And that payment was in turn taxable. In fact, that progression continues potentially for ever, although obviously the payments will trend to zero.

What some companies do is work out the progression up front and make a single first-year payment to take account of it.

JAJ

Life insurance is taxable to the extent the sum insured exceeds $50,000.

texasjan

Thank you all for the input. Naively thought I could file seperatly for my pension as in the uk. So it has to be fully joint and I pay tax rate taking into account allowances/tax

Michael

Unless the law has recently changed, I don't think that is true. For most companies, I was provided with at least 2x my annual income in life insurance and I wasn't taxed on any of that amount.

The last company had flexible benefits that allowed me to spend a fixed amount of tax free benefits on a menu of options. If I didn't spend the full amount, I was paid the excess as income and that was taxable.

JAJ

Group term life insurance is taxable if amount exceeds $50k. See publication 15b: http://www.irs.gov/pub/irs-pdf/p15b.pdf
That's not something new or recent, your employer should have included the cost of insurance (based on IRS tables) in excess of $50k on your W-2.