CATEGORY:Tax-Related
  • Who should I direct my questions in regards to my specific tax situation?:

    If you have specific questions relating to your relocation, it is highly recommend that you speak your Tax Accountant.  

    You may also contact the IRS phone 800.8291040 / website  IRS  

    or  State and Local Tax Authorities 

     

  • As a corporation, I’d like to move an employee to our corporate headquarters from the regional office. The employee is only about an hour away, but the drive would be too much on a daily basis. Would the move be considered a relocation from a tax standpoint?:

    To determine who's eligible, the IRS has set up two tests--pass them and you can cash in; fail and you have to eat all the costs of your move. Keep in mind, the IRS lets you take this deduction only if you are moving because of a job. It doesn't matter if it's a new job, the same job or your first job. (Recent college grads, take note.) Your first challenge will be to pass the 50-mile test. That means the distance between your new primary job and your former home must be at least 50 miles greater than your old commute. So if you lived 10 miles from work and your new office is 45 miles from your old home, you lose. You can't deduct your moving expenses. If, on the other hand, your new office is 65 miles from your old home, then your new commute is 55 miles longer and you pass the first test. The second test was designed to prove that you moved for work and not just for a change of scenery. It requires that you be employed full time in the general area of your new job location for at least 39 weeks during the 12 months after you make the move. This means you are allowed to switch jobs as often as you'd like after the move. If your employer transfers you again or even lays you off, the IRS won't hold it against you and will waive the 39-week test.

  • Which expenses from my final move are considered taxable?:

    The IRS only allows a portion of the mileage driven to be tax deductible.  The 2013 business mileage rate is 56.5 cents per mile; the allowable rate for moving is 24 cents per mile.  Final Move trips, only 24 cents per mile can be considered non-taxable.

    So in this example, the difference of 56.5 cents (business rate) .24 cents (relocation rate) = 32.5 cents which is the amount considered taxable. Meals are considered a taxable expense as well. The IRS does allow lodging in route to new location, although some limitations may apply. If you are reimbursed for gas, it would be taxable as the IRS utilizes a mileage calculation over gas reimbursement.

  • What relocation expenses are taxable?:

    Temporary Living expenses, whether paid to you as a reimbursement or paid directly to the temporary living provider, are taxable. Home finding trip expenses, trips home, storage of your household goods over 30 days, reimbursements for closing costs on either the old or new home (BVO and AVO/FHP programs are exempt), lease break fees, security deposits and miscellaneous moving expenses/allowances are all taxable. Basically, the only items NOT taxable are the actual move of your household goods, storage of your household goods for less than 30 days, moving your auto, and moving your family (one way trip to new location). Please note: only a portion of the final move trip will be tax exempt.

  • Why were my total earnings on my W-2 higher than my salary?:

    Many relocation expenses are considered a taxable benefit to you, whether paid directly to you or paid on your behalf. These amounts are added to your income.

  • Are there programs to tax protect our organization?:

    Yes, it is important to be aware of such products as Buyer Value Option (BVO) and Amended Value Option (AVO) when structuring your program. What you select will determine how to tax protect the organization.

  • CATEGORY:Tax-Related
    Who should I direct my questions in regards to my specific tax situation?:

    If you have specific questions relating to your relocation, it is highly recommend that you speak your Tax Accountant.  

    You may also contact the IRS phone 800.8291040 / website  IRS  

    or  State and Local Tax Authorities 

     

    As a corporation, I’d like to move an employee to our corporate headquarters from the regional office. The employee is only about an hour away, but the drive would be too much on a daily basis. Would the move be considered a relocation from a tax standpoint?:

    To determine who's eligible, the IRS has set up two tests--pass them and you can cash in; fail and you have to eat all the costs of your move. Keep in mind, the IRS lets you take this deduction only if you are moving because of a job. It doesn't matter if it's a new job, the same job or your first job. (Recent college grads, take note.) Your first challenge will be to pass the 50-mile test. That means the distance between your new primary job and your former home must be at least 50 miles greater than your old commute. So if you lived 10 miles from work and your new office is 45 miles from your old home, you lose. You can't deduct your moving expenses. If, on the other hand, your new office is 65 miles from your old home, then your new commute is 55 miles longer and you pass the first test. The second test was designed to prove that you moved for work and not just for a change of scenery. It requires that you be employed full time in the general area of your new job location for at least 39 weeks during the 12 months after you make the move. This means you are allowed to switch jobs as often as you'd like after the move. If your employer transfers you again or even lays you off, the IRS won't hold it against you and will waive the 39-week test.

    Which expenses from my final move are considered taxable?:

    The IRS only allows a portion of the mileage driven to be tax deductible.  The 2013 business mileage rate is 56.5 cents per mile; the allowable rate for moving is 24 cents per mile.  Final Move trips, only 24 cents per mile can be considered non-taxable.

    So in this example, the difference of 56.5 cents (business rate) .24 cents (relocation rate) = 32.5 cents which is the amount considered taxable. Meals are considered a taxable expense as well. The IRS does allow lodging in route to new location, although some limitations may apply. If you are reimbursed for gas, it would be taxable as the IRS utilizes a mileage calculation over gas reimbursement.

    What relocation expenses are taxable?:

    Temporary Living expenses, whether paid to you as a reimbursement or paid directly to the temporary living provider, are taxable. Home finding trip expenses, trips home, storage of your household goods over 30 days, reimbursements for closing costs on either the old or new home (BVO and AVO/FHP programs are exempt), lease break fees, security deposits and miscellaneous moving expenses/allowances are all taxable. Basically, the only items NOT taxable are the actual move of your household goods, storage of your household goods for less than 30 days, moving your auto, and moving your family (one way trip to new location). Please note: only a portion of the final move trip will be tax exempt.

    Why were my total earnings on my W-2 higher than my salary?:

    Many relocation expenses are considered a taxable benefit to you, whether paid directly to you or paid on your behalf. These amounts are added to your income.

    Are there programs to tax protect our organization?:

    Yes, it is important to be aware of such products as Buyer Value Option (BVO) and Amended Value Option (AVO) when structuring your program. What you select will determine how to tax protect the organization.