In 2018, my company is giving me a $10,000 lumpsum payment for relocation purposes. This is considered taxable income and is only to be used for moving expenses. This will get reported on my W-2 as gross pay, however it is deductible by Moving Expense Deduction.
The company will first withhold taxes (for me, probably around 22%) on this lumpsum payment. I'm a bit confused on how to deduct this on moving expense deduction.
The moving expense deduction states that only if I spend MORE than the income given for moving expenses will I be able to claim it as a deduction, otherwise I must report it as taxable income.
Say that after taxes withheld, I end up receiving $7800 in the bank. I end up spending $14000 on moving expenses (storage costs, transportation, shipping, etc). Then (1) do I deduct $6200 or $4000 on my tax return? (2) If I spend $4000 then am I taxed on the remaining $3800? (3) What happens to the $2200 of the lumpsum that gets withheld, is there a way to get that refunded if I spend more than $10000 on moving expenses?
I believe the moving expense states that I can deduct storage costs for up to 30 days. Say I use someone's apartment as a storage space, and I pay that person, instead of using an actual Public Storage warehouse, (4) does that still count as moving expenses I can deduct? (5) How would I have proof of this (since it's going to be a peer to peer payment instead of peer to business payment)? (6) Would I need to have evidence ready that I made payment of this (like in bank statement) and written confirmation from the other side that I had paid them?
(7) What about food, living expenses, transportation expenses for relatives that have helped me move here? Are those considered moving expenses as well?
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"This is considered taxable income and is only to be used for moving expenses"
No. As taxable income, it can be used for anything. As Opus said in one of your other questions, they just increased your pay. That is the same thing for the "tax assistance". It is just a way of 'grossing up' your pay to cover expenses.
Because your employer is just treating it as increased wages, you don't count it as a moving expense reimbursement. So include the full amount of moving expenses.
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