Taxable Relocation Benefits

Today TaxMama hears from Sarah in the TaxQuips Forum, who recently moved. “In June I started a new job. The company paid for the relocation and provided an allowance for getting started. I received information from the relocation company, which broke down the payments as non-taxable and taxable. I have about $2,500 in Taxable Grossed-Up “Non-Deductible” Expenses. Where on my federal return do I report this income?”

 Hi Sarah,

Take a look at the instructions that came with the report you got.

The fact that the reimbursement was “grossed up” generally means two things:

1) Your company paid you some extra money to make up for the taxes you have to pay on the non-tax reimbursements.

2) The money was included in your wages.

If you check with your company’s payroll department and they tell you that they did not include this in your wages, report the extra income on Line 21 of your Form 1040 as “other income”.

It is not subject to self-employment taxes, so you’re off the hook there. Since it’s probably already in your wages anyway, you’ve probably already paid the taxes and don’t need to report it again.

Enjoy your new home – and job.

And remember, you can find answers to all kinds of questions about moving expense reimbursements and other tax issues, free. Where? Where else? At www.TaxMama.com.

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