If a company gives X dollars for relocation but ask me to pay back if I leave the company. Wil it be taxed?

Answer 1

Short form: It depends. If they only pay expenses that would be deductible moving expenses, and require receipts, the payment is not taxable, but you can't deduct the expenses. If they just give you a fixed amount, you must include it in income, but you can deduct at least some of the related expenses. The IRS publication linked under 'sources' discusses moving related issues.

Answer 2

Save copies of all receipts!

Your company may or may not require receipts. If they require the receipts (and only reimburse you for certain expenses) and if you stay at your job for the required length of time you'll have a pre-tax benefit (not in the box 1 of the W-2)and virtually nothing to do on your tax return even if you have to pay the money back.

If they don't require receipts, you'll have to account for the expenses yourself on the return, but it's subtracted on the front of the return, so the tax effect is the almost the same. This would be a post-tax benefit. (Any amount over the deductible expenses is taxed as wages to you.) However, if you have to pay this back, try to do it in a lumpsum because the deduction for "repayments" is limited if the amount you pay back in any given year is $3000 or less. (IRS publication 525.)