Business Q&A

Question:
I'm moving from one state to another and the expenses are going to be almost $10,000. I'm using a U-haul so I'm going to have a lot of small expenses. Is it legal for my work to give me some type of set amount to move and not tax it? If so, where can I review this in the IRS rules?

THANKS!!!!

Answer:
Yes, they can pay in lump sum. I just went through this myself. Assuming they pay you $10,000 and your tax rate is 20% (between social security, medicare, fed wh, st wh, local, etc) you'd net $8,000 on your paycheck. lets further assume your federal withholding equals 7% or $700 of the $2,000 withheld. Then you'd spend the $10,000 in actual expenses and file your tax return with those expenses as itemized deductions. Assuming you have exactly $10,000 in expenses you'd reduce your taxable income by $10K and get your federal withholding back - $700. What happens to the other $1,300? Most of it's gone. You may get some back from the state, but you'll never see the 7.65% or $765 of social security/medicare until you retire (even then it's doubtful).

Another option is to have the company "gross up" your check so that you net $10,000, but that will cost them more a) for you and b) for what they have to match.

Overall you're better off turning in receipts. If they don't add up to $10K but you want the money - that's another story.

Resource related business question and answer:

IRS Abuse Reports #234-281

... give IRS the proceeds, a lien was placed on our home and all property and we were to pay $50,000 per year with 'after tax' money only. After paying this amount ... me to purchase a home after my job relocation ...

---

Pantagraph.com | Letters | Democrats can?t bury country deeper than ...

... Give non-drinkers own concert section; Big Money ... me that because i was typing fast and misspelled majority, that it says something about my knowledge. Let ... all kinds of labels rather than ...

---