Tax of bonus?

My new employer paid me a "moving bonus" when I started my new job (I had to relocate from another state). I assume this is essentially a signing bonus, and tax should be paid as such?

Thanks

Reply to
martin lynch
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As you describe it, the amount will be included in your W-2 from that employer.

If you otherwise qualify, your direct moving costs will be deductible on your tax return for the year of the move.

Reply to
Bill Brown

Yes, but some of it may be excludible as moving expenses. See Form 3903.

Ira Smilovitz

Reply to
ira smilovitz

It actually did not appear on my W-2. Was it supposed to? Nevertheless, it sounds like a "signing bonus" is the way I should classify it on my tax filing.

Reply to
martin lynch

Unless you accounted to your new employer for your direct moving costs and the amount of this "bonus" was to reimburse you for those costs then, yes, the amount of the bonus should have been included in the total shown in box 1 of your Form W-2.

If you had been paid a "signing bonus," that amount would also have been properly included in the box 1 total.

Reply to
Bill Brown

Borrowing from a film classic moment, what we have here is a failure to communicate. Let me take a shot.

Regardless of what you or your employer called this payment it's wages on line 7 of your 1040. There's no special place to put it or name for it on your return. Your employer should have included this amount in the Box 1 wages of your W-2. You've got the numbers, you figure out whether or not your W-2 is correct. If it's not you need to address that problem with them.

Moving expenses are a separate issue. It sounds like you have deductible expenses you can claim on Form 3903. Get Publication 521 for an explanation of what's deductible and how you do it.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

It seems your employer may have prepared your W-2 incorrectly. You'll likely never get them to fix it and making an issue of it will not put you in their good graces. What should have happened is that your W-2 should have included an amount in Box 12 as Code P - for reimbursed moving expenses. When you prepare your personal return you claim your moving expenses on Form 3903, reduced by the reimbursement. Should the reimbursement exceed your actual expenses you have taxable income.

In your case, the EASY, though not technically correct, fix is to simply reduce your moving expenses by the amount of the unreported reimbursement. This gets you to the same place. And if you find that your reimbursements exceed your actual expenses then claim NO moving expenses, exclude Form 3903 and put the excess as Other Income on Line 21. Again, it is technically incorrect but it gets you to the correct ending.

Good luck, Gene E. Utterback, EA, RFC, ABA

Reply to
Gene E. Utterback, EA, RFC, AB

Note that this assumes that the payment in question was not included in Box 1 of the W-2. This solution reaches the right ending for income tax, but it leaves out the unpaid FICA/Medicare which is payable under a nonaccountable moving reimbursement. Reimbursements under an accountable plan are not taxable and do not appear in Box 1 of the W-2.

To fix this one and cover everything you'd report the entire payment on Form 8919 and line 7 of the 1040 and claim all allowable moving expenses as an adjustment to income.

Phil Marti VITA/TCE Volunteer Clearksburg, MD

Reply to
Phil Marti

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