Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I've received W2 form for the first time after I moved to US and I'm struggling if I need to deduct relocation expenses paid by the employer. Here's the info:
1. Moved to US on the 28th of February 2015. Apparently 39 weeks time test is met, I was 6k miles away from US so I assume distance test should be met either.
2. Employer paid 18k of relocation expenses directly to suppliers (hotel, tickets, everything) and paid this 18k + taxes on it in a separate paycheck where I got 0 as a result.
3. 18k were put on top of my salary into box 1 of W2 form + 315$ into 12P which is probably non taxable meals.
Now here comes the question:
I used turbo tax and it shows that I'm getting ~2k as federal refund, however, in several places it seems that I can deduct 18k paid by employer (my expenses are 0$), in this case my refund will be 5k.
I'm feeling that 5k is too good to be true, but I see this:
Quote:
Sheridan this is why you should pay a CPA. You said," They grossed it all up and included it in his salary."
If that's the case you have deductible moving expenses. If the reimbursements were NOT included in your gross income then your deduction is limited (to the unreimbursed deductible costs).
How much did buying software, doing it yourself and NOT taking that deduction cost you? I'd guess its more than the entire cost of paying the CPA $600... (a very reasonable fee.)[LEFT]
Read more: http://www.city-data.com/forum/perso...#ixzz3yOy8yaOk
[/LEFT]
So I'm kind of in between because 3k is definitely a good deal. Any thoughts?
Long time since I looked at moving costs and the rules could have changed. As I recall expenses paid by employer directly to the vendor would not be on the W2. But since they are and all the money was spent on your transfer you should record most of the 18,000 as deductible moving expenses.
Meals are a problem and that is why you probably have some dollars in box 12. You probably have taxable income on this amount. Turbo tax will give you the answer once you put the P into the program.
There are other rules but Turbo tax should take you through them.Just keep in mind that almost all of the 18,000 should be deductible. You can also go to the IRS site and get their pamphlet on moving just to make sure you are ok. I think you will find out you are closer to the 5,000 refund than the 2,000. If you can not come up with most of the 5,000 refund then it will pay to consult a professional.
You will want to enter the detail on of each expense into Turbo Tax. Use the interview option. Assume you wrote the check if you have problems understanding the questions. In effect you did sine the 18,000 was reported as income.
Thanks for the answer. Turbotax is not asking for anything else (how would it know that part of my box 1 of W2 is relo expenses?), when I enter 350$ into the 12P field turbotax says that I need to upgrade to premium version as this 12P makes things more complicated, it never asks me if I have any moving expenses (maybe in premium version it does).
Anyways, I downloaded the form from IRS as well as the manual and spent a while reading through, I ended up with ~5k of refund as well because my taxable income was X-20k instead of X due to that I filled form 3903 and put result into line 26 of the 1040 form (moving expenses), however, I still can't understand how is this supposed to work?
My employer paid 18k for my relocation (I'm not going to say that I could've saved 50% of it if I was doing it on my own), added this figure to my paycheck, paid 6k taxes on it according to my paycheck (i.e. i paid 0 taxes on it out of pocket) and now I'm getting +3k of refund on top of it? Why my employer didn't pay this to himself and received a refund? It's not like I'm trying to avoid getting extra 3k as total 5k of federal tax refund is just right in time, I just don't want to file my first W2 ever and end up with fines and so on.
I think there is more info that is needed and you might have to see a CPA to discuss.
The 12P is just taking you to form 3903 which is the moving expense form.
As I now understand it your moving expenses were 18,000 and your employer felt that they were taxable to you so they added 6,000 to your pay so you would not be out of pocket. The 6,000 is taxable too so the calculation can be complicated.
Seems like your employer is being very nice. I do not understand why they would add 6,000 to your pay if the 18,000 is deductible moving expense. As I stated I am not sure what is going on but I would think you can complete form 3903 and deduct most of the 18,000 as moving expense. I would tend to do this based on my understanding. You will then benefit from about 3,000 more in a tax refund and 6,000 ( probably 5,000 net after taxes) paid to you by your employer. If you do not want to file form 3903 on your own then I would go to a CPA that does taxes. Maybe you can pay for an hour of his time to discuss your tax problem.
I think there is more info that is needed and you might have to see a CPA to discuss.
The 12P is just taking you to form 3903 which is the moving expense form.
As I now understand it your moving expenses were 18,000 and your employer felt that they were taxable to you so they added 6,000 to your pay so you would not be out of pocket. The 6,000 is taxable too so the calculation can be complicated.
Seems like your employer is being very nice. I do not understand why they would add 6,000 to your pay if the 18,000 is deductible moving expense. As I stated I am not sure what is going on but I would think you can complete form 3903 and deduct most of the 18,000 as moving expense. I would tend to do this based on my understanding. You will then benefit from about 3,000 more in a tax refund and 6,000 ( probably 5,000 net after taxes) paid to you by your employer. If you do not want to file form 3903 on your own then I would go to a CPA that does taxes. Maybe you can pay for an hour of his time to discuss your tax problem.
What the OP is describing is common in corporate relocations. The company pays for the relocation, what they pay for is considered compensation and is taxable. The company then grosses up your pay and withholds federal withholding from it in an attempt to neutralize the federal obligation
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
