I accepted a promotion form my company in August of last year. I moved from FL to OH late in the year. Since the promotion meant I was transferred to a different legal entity of my company I received two W2's for 2006. The problem is While one of the W2's had relocation expenses on it, I know my gross pay for 2006 was not the combination of the two. I contacted my payroll department, and the company's relocation service, and both had the same answer. "You need to file both W2's, and we recommend you contact a tax professional." While I don't mind paying a professional preparer I just want to understand the process. Can anyone explain?

It depends on how your company handles relocation expenses. Some companies gross up the expenses so they are tax neutral to you. Basically, you should file using the info on the W2s.

If your reimbursements were taxed, then you should claim moving expenses on Form 3903.

Ask if the relocation payments were taxed as part of your pay. A clue is if there is a difference between the amount in Block #1 vs what is shown in Blocks #3 and #5.

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Originally Posted by oberacla

I accepted a promotion form my company in August of last year. I moved from FL to OH late in the year. Since the promotion meant I was transferred to a different legal entity of my company I received two W2's for 2006. The problem is While one of the W2's had relocation expenses on it, I know my gross pay for 2006 was not the combination of the two. I contacted my payroll department, and the company's relocation service, and both had the same answer. "You need to file both W2's, and we recommend you contact a tax professional." While I don't mind paying a professional preparer I just want to understand the process. Can anyone explain?

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First Thanks for your answers.

Some expenses were grossd up others were not. Also do I file 2 returns since my total income was not the total of the 2 W's. Or do I file one using the hisgher of the 2?

I would say you combine the two. You definitely file only one return. But the question (whihc your HR or pyaroll dept needs to naswer) is whether one is an amended W2 covering the whole year or whether they are two different W2s, each covering your stint with the specific division.

Separate W-2s are likely. Each company is different, but I have seen multiple times when the same company with the same tax ID # issues two separate W-2s to the same employee.

You will file ONE federal return and ONE state return, combining the income on the W-2s.

If you want professional help on these issues, contact me at [email protected].

Atlanta Tax Expert thanks for your reply. I understand that only one for them has state tax taken out and I will fole that one with Ohio. I do have one quesiton, for Federal, do I add the two even though the total gross is more than I actually received?

If the total of the two Blocks #1 does NOT represent what your actual salary was for 2006, then you need to go back to your employer and get it corrected.

The reason this is necessary is that the IRS will expect you to claim the total of the two Blocks #1 as your total wages. They already have a copy of the W-2s.

Have your employer correct the problem and issue you (and the IRS) a W-2C. When you get it, use the W-2C instead of the incorrect W-2s.