Moving Expenses?
danaf
3 Posts
Hello all,
My company is relocating a new employee and I have some questions about moving expenses. If we pay one month's salary - which is a fairly standard practice - to cover any miscellaneous moving expenses, is that considered taxable income? Also, If we pay for temporary housing and the packing/moving of household goods, are those items considered taxable income? I've checked IRS publication 521, but unfortunately, it seems to be about as clear as mud. I would appreciate any guidance on this subject. Thanks!
Dana
My company is relocating a new employee and I have some questions about moving expenses. If we pay one month's salary - which is a fairly standard practice - to cover any miscellaneous moving expenses, is that considered taxable income? Also, If we pay for temporary housing and the packing/moving of household goods, are those items considered taxable income? I've checked IRS publication 521, but unfortunately, it seems to be about as clear as mud. I would appreciate any guidance on this subject. Thanks!
Dana
Comments
Nontaxable to the EE: unreimbursed expenses for moving household and personal effects, temporary storage for household goods, and travel/lodging during the move.
Taxable to the EE: costs reimbursed by the employer for selling the old residence, buying a new residence, settling an unexpired lease, house-hunting trips, temporary lodging/meals in the new location, maintenance for actual expenses of the move such as gas/oil.
My guess is that a written agreement would be required, and reimbursable expenses must be clearly outlined in the agreement. If you reimburse the employee, the money you provide is taxable. If you don't reimburse, the employee's costs may or may not be deductible on personal income tax returns.
We have done this several ways. We have let the employee pay out his expenses and reimbursed him upon presentation of receipts, etc.
We have also given a flat dollar amount..say... $5,000 as a relocation bonus. This is taxable income. If they spend it all on moving, fine...if they don't...they pocket the rest...but it's still all taxable.