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sayil123
Jan 3, 2006, 05:38 AM
I recently got an offer and the company said they will provide me with a lumpsum relocation amount of $10000. The company is on South Carolina.

What I need to know is how much tax will be deducted from this 10K and will this amount be added to my net income inthe year 2006.

Can I claim the tax deducted from the relocation expenses in the year end.
AtlantaTaxExpert
Jan 3, 2006, 07:12 AM
Sayil123:

The $10K relocation payment is considered compensation and is subject to income taxes, though (probably) not Social Security or Medicare taxes.

How much tax is withheld is dictated by your claim for exemptions on the W-4.

Assuming your move in 2006, you will be able to claim certain moving expenses by filing Form 3903 with your 2006 tax return. The expenses you can claim are the direct costs of the move: traveling costs (mileage, lodging [but NOT meals]), the cost to move your personal effects (furniture, car, etc.) and storage costs of those personal effects.