Is a "relocation payment" considered income?

Question

I moved from New York to California for a job. But I began the job six months before moving and for those six months commuted every week (flying out to California on Monday mornings; flying back Thursday nights).

My company gave me a $8000 payment to help defray these costs (and in addition paid our moving expenses).

So here are my questions:

- Is the $8000 considered income? And if so, are my plane tickets considered expenses I can write off?

- Are the moving expenses they paid for income?

Thanks for the help.

Answer 1

The money spent commuting for your job should have been reimbursed by your company or can be written off as an expense. Money given to you by your company for moving is taxable.

Answer 2

The $8000 would be considered income, and the weekly trips back and forth after you started your new job but before you actually moved would not be deductible. Transportation for you and your family when you actually moved is deductible; trips back and forth, where you return to your previous home, are not.Those are considered personal expenses, since strictly speaking they weren't necessary but were your choice.

As to the rest of the expenses, the actual moving expenses: there are different types of reimbursement plans that employers can use. In some cases you have to report the income but then claim the expenses, and in some cases you don't report either. Assuming your employer just reimbursed your actual expenses, even if you do end up having to report it, you'd break even since you could subtract the expenses, including transportation on the actual moving trip.

Publication 521 (download from irs.gov) explains in detail what expenses can be deducted and what can't.

Answer 3

It sounds like the $8000 would be considered income, but the moving expenses could be deductible. If you were reimbursed under an 'Accountable Plan' the payment would not be taxable, but the expenses would not be deductible. The IRS publication 521 (linked below) deals with moving expenses. I would talk to a tax professional for a proper interpretation as it applies to your situation.

Answer 4

If your employer gave you a moving allowance, such as $8,000, it is fully taxable as income. Of course, your direct moving expenses-including the cost of your plane ticket-are deductible, perhaps eliminating any tax on the reimbursement.

However, if you reported deductible moving costs to your employer who then reimbursed you for actual expenses, the reimbursement is not taxable income to you. But employer reimbursements for nondeductible expenses, such as loss on the sale of your home, are taxable income for to you.

Answer 5

1. Yes, you have to pay taxes on it. Tickets might be able to be, but check California tax laws.

2. Depends on company policy.

Look at this site for more info:

http://www.vault.com/nr/newsmain.jsp?nr_page=3&ch_id=350&article_id=20416&cat_id=83

Answer 6

any income made out to you is considered gross income on your tax return. You then take the cost of travel related or other out of pocket cost against the gross income. It should come out awash.