What is a "Tax Assisted" Lump Sum Relocation Payment?

Question

I will be receiving a lump sum relocation amount from my company and even though it will be reported as income it say ist will be "tax assisted". My interpretation of this is that this means I will not be taxed on this payment when I receive it but that I will be taxed on any amount that can't be deducted through relocation expenses, is this correct? Thanks

Answer 1

not enough info. to be certain. You need to ask your employer. However, when I have done this in the past, the amount report on my W-2 was grossed up so that I paid no additional tax.

Answer 2

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RE:

What is a "Tax Assisted" Lump Sum Relocation Payment?

I will be receiving a lump sum relocation amount from my company and even though it will be reported as income it say ist will be "tax assisted". My interpretation of this is that this means I will not be taxed on this payment when I receive it but that I will be taxed on any amount that...

Answer 3

I'm not sure what they mean when they say, "Tax Assisted," but if they pay you a flat sum for the move it will be included on your W-2 as taxable wages. You then file Form 3903 to take an adjustment against your gross income for the cost of the move. In this way, if your deductible expenses are less than what they give you the excess is taxable income. If your expenses are more, your taxable income will be reduced.



The other way for them to handle this is to reimburse you for your actual deductible costs under an accountable plan. This has no tax consequences for you. It's not reported on your W-2 and you cannot deduct the costs that are reimbursed.

Answer 4

I work in relocation for a global corporation. This means that your company will gross-up this distribution (which is essentially income to you) by estimating the tax you would have to pay on these monies. This is typically done at year end and the gross up amount is then also added to your W-2 income. Basically, your company will "give" you the estimated amount of taxes you will need to pay on this additional income. The catch is, the gross-up amount allotted to you is ALSO considered income. As these amounts (both the distribution and the gross-up) are considered income, it may throw you into a higher tax bracket.

Answer 5

Probably that they are giving you enough extra $$$ to defray any tax liability that would accrue from the payment of the relocation package. I'd wager that they're giving you more than the amount that you'll be likely to be able to deduct for the move; any excess is taxed as ordinary income.

Answer 6

if you declare it as income you will be allowed to also report your moving expenses and if there is an excess over your expenses that will be the actual amount that you are paying taxes on



you really won't see direct relation because you will be reporting the full amount, which included in your gross income but you have the moving expenses credit that will reduce the gross to the AGI

Answer 7

A lump-sum tax is a tax that is a fixed amount no matter what the change in circumstance of the taxed entity. (A lump-sum subsidy or lump-sum redistribution is defined similarly.)



It is one of the various modes used for taxation: income, things owned (property taxes), money spent (sales taxes), miscellaneous (excise taxes).



It is a regressive tax, such that the lower income is, the higher percentage of income applicable to the tax. An example is a poll tax to vote, which is unchanged no matter what the income of the voter.



In economic theory, a lump-sum tax may have the advantage of not contributing to an excess burden of taxation, a loss in economic efficiency that results from taxes reducing incentives for production. In practice, lump-sum taxes are often encountered, in spite of their conflict with other criteria, such as equity or ability to pay. A lump-sum tax remains a standard for measuring the performance of other imperfect kinds of taxes (J. de V. Graaf, 1987).