Relocation Lump Sum Repayment

Forum|Forum|6 years ago
August 2, 2019
1 reply
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Hi! I received a lump sum $10,000 for relocation from my employer. After taxes was taken out I received $7,035. Due to unforeseen circumstances I had to leave the company before my 1 year.

I am being asked to repay the $7,035 I received. What’s the implication of the $2,965 paid in taxes? Will I end up owing more taxes this year? Or will I get a larger refund due to the higher taxes already withheld?

Thank you in advance!

Best answer by rjs

@numcrunch wrote:
Is there a way for me to confirm my employer filled out my W-2 correctly?

You should do both of the following.

1. Discuss it in detail with the payroll department. I strongly recommend doing this now, even before you make the repayment, to make sure you have a clear agreement on how it's going to be handled. Put your understanding in writing and send them a copy (or ask them to put it in writing). It's much better to take action in advance to make sure that the W-2 will be correct, than to find out after you get the W-2 that it's wrong and have to go through the hassle of trying to get it corrected (especially if you won't be there in January when the W-2s are sent out).

2. Crunch the numbers, numcrunch 😊. Keep track of the gross pay and federal income tax withheld on your pay stubs, and compare the final amounts to the W-2. Make sure the $10,000 gets backed out of the year-to-date gross, and that the $2,965 does not get backed out of the tax withheld.

rjs

Level 15

If you are repaying the amount in the same year that you received it, the $10,000 gross should not be included in the wages in box 1 of your W-2 for the year, but the $2,965 tax that was withheld should be included in the federal tax withheld in box 2 on your W-2. Thus, if your employer fills out the W-2 correctly, you will not be taxed on the money you repaid, and the extra $2,965 of withholding will be applied to your tax and increase your refund.

N

numcrunchAuthor

Level 2

Thank you for your speedy response!

I will be repaying the amount in the same year I received it. Is there a way for me to confirm my employer filled out my W-2 correctly?

rjs

Answer

Level 15

@numcrunch wrote:
Is there a way for me to confirm my employer filled out my W-2 correctly?

You should do both of the following.

1. Discuss it in detail with the payroll department. I strongly recommend doing this now, even before you make the repayment, to make sure you have a clear agreement on how it's going to be handled. Put your understanding in writing and send them a copy (or ask them to put it in writing). It's much better to take action in advance to make sure that the W-2 will be correct, than to find out after you get the W-2 that it's wrong and have to go through the hassle of trying to get it corrected (especially if you won't be there in January when the W-2s are sent out).

2. Crunch the numbers, numcrunch 😊. Keep track of the gross pay and federal income tax withheld on your pay stubs, and compare the final amounts to the W-2. Make sure the $10,000 gets backed out of the year-to-date gross, and that the $2,965 does not get backed out of the tax withheld.