Questions about relocation (moving) expenses
Kenneth S. Rubin
I am considering a new job that would require my family to relocate
to a new state. I have the ability to negotiate my relocation package.
Below I have outline my current relocation proposal. Assuming that
my new employer pays all relocation expenses, my questions are as
follows:
1) Which of the expenses are considered income/fringe benefit for
which I will be taxed?
2) Which expenses, if any, can I deduct? For example, if I use money
from relocation line item (5) to pay for my mortgage points, can I
still deduct these points?
3) How would you change the relocation proposal to minimize the
overall amount of money that I have to spend? This may involve
my new employer not paying all of the relocation expenses.
BTW: I am aware of Section 217 of the tax code (the first section of
which is reproduced at the end of this message).
Thanks for your input....
Best regards,
--Kenny Rubin
kru...@parcplace.com
My current relocation proposal covers five line items:
1) Shipment of household goods to new location. Includes expenses
such as:
* Packing of personal possessions
* Transportation
* Insurance
* Storage in transit, if necessary, for up to 30 days
* Shipment of one car
2) One way transportation of employee and family to new area.
3) A lump sum gross payment to be used toward:
* Temporary living
* House hunting trips
* Trips home
* Other incidental relocation expenses
4) House selling expense assistance:
* Real Estate Fee (e.g., x% of selling price)
* Customary selling fees (e.g., transfer tax, title
search/insurance, escrow fees, etc.).
5) House buying expense assistance:
* y% of loan amount to cover (mortgage points, transfer tax,
title search, etc.).
-------------------------------------------
SECTION 217. Moving expenses
(a) DEDUCTION ALLOWED
There shall be allowed as a deduction moving expenses paid or
incurred during the taxable year in connection with the
commencement of work by the taxpayer as an employee or as a self-
employed individual, at a new principal place of work.
(b) DEFINITION OF MOVING EXPENSES
(1) IN GENERAL
For purposes of this section, the term "moving expenses"
means only the reasonable expenses--
(A) of moving household goods and personal effects from
the former residence to the new residence, and
(B) of traveling (including lodging) from the former
residence to the new place of residence.
Such term shall not include any expenses for meals.
TexTax
expenses of the move. All of the payments by the company will be taxable
and appear on your W-2. You will then deduct the allowable expenses (be
sure to save receipts) using IRS Form 3903. Grab the company's offer, it
seems pretty generous to me, even if you do have to pay taxes on some of
it.
The IRS doesn't care what you use your income for, but the company might;
They probably will want to see receipts also.