H1-B fees (legal, filing, premium, etc) considered taxable income to the employee
My employer recently sent me an email saying
"It has recently come to our attention that immigration legal fees paid by the employer are considered taxable income to the employee. Generally speaking, the IRS considers immigration fees paid by an employer as a taxable fringe benefit to the employee.
Therefore, based on advice from our Corporate Tax department, Payroll will be including any immigration fees that were paid on your behalf by the firm as taxable income on your paycheck. The fees will appear under the Earnings section of your pay-stub as M3 FRINGE."
These fees include:
Lawyer fees: $800.00
USCIS filing fees (Form I-129): $320.00
USCIS Anti Fraud Fee: $500.00
Overnight courier: $36.00
USCIS Filing Fee for I-907 (Premium Processing Fee): $1000.00
My question then is, do I have incur all of this as taxable income? The total amount is $2656 and the corresponding tax on it i.e. approx $700 will have to be paid by me. Is that correct or is there any documentation to refute these?
Thanks a lot for taking a look at this.
Comment on kusuma7884's post
1st. If repayment wasn't originally negotiated, I would refuse to repay.
2nd. Current year W2 should not be modified unless the H1B expenses are for 2011 AND are part of W2 income.
3rd. Now we need more details:
Was any portion of the repayment for amounts that were included in prior year W2?
If yes, we are repaying prior year W2 wages,
W2C for prior year should be issued adjusting WAGES in box 3/5 and taxes for boxes 4/6 [Box 1 wages are box 2 taxes are not adjusted in this situation. EE needs to claim misc. business deduction on 2011 personal tax filings.]
Employer should give EE itemized receipt for repayment, w2c, and pay EE box 4/6 tax delta difference.
If no, not repaying prior year W2 wages,
Then just the receipt of repayment. Seek tax assistance as necessary to claim repayment as tax deduction on 2011 personal taxes.
Comment on kusuma7884's post
Thank you for the comments, That is really helpful.
I was told initailly that I have to pay the H1 B expenses if I change the employer. So No repayments was originally negotiated. The H1B was filed in Feb 2011. No portions of repayment were included in prior W2.
Can an employer make H1B expenses as a part of W2 income? If he refuses, can they give me a repayment receit, and I can seek a tax assistant and claim the expenses.