Hello,

I accepted a job offer that offered relocation reimbursement. However, my offer stated that if I left the company before three years I had to pay it back. When I filed my taxes the relocation money showed up on there but now that I am leaving they want me to give them a check for the full amount back. Being that I will be paying them back, can I use it as a deduction next year and if so how (I am cutting them a personal check so how will it show up on my W2?)

Thanks

Since this question has been unanswered by anyone caliming to be a real expert, here is my decidedly unexpert opinion:

I don't believe that the W2 will reflect the fact that you made a repayment, but I could be wrong - I suggest you ask your payroll department how they would report the repayment if at all.

If your repayment doesn't appear as a negative income on your W2, then a couple of things you may be able to do are:

1. Claim deductible moving expenses on next year's taxes. The amount you can deduct is probably different from the amount you repay, as the IRS has some pretty strict rules as to what you can deduct. Whether you should claim this deduction on your 2007 taxes, or file an amended return for the tax year in which you actually moved, I don't know.

2. Claim an unreimbursed employee expense on your 2007 Schedule A for any amount of the repayment above and beyond what you are able to deduct as a moving expense - I think you'll also need to file form 2106.

On a side note - I worked at a company that moved offices from NJ to TX, and the company paid moving expenses for those of us who made the move, with the stipulation that if you left the company within 2 years you had to repay them. Well, several of my colleagues did leave within the 2 year window, all got letters saying they had to repay, none actually did repay, and the matter was dropped. Turned out the company had outsourced so much of their payroll and relocation oversight that there was no one left and no mechanisms in place to actually enforce the rule.

Hello lil:

It won't show on your W2, but there's a place on your 1040 to deduct it.

excon

If you have to repay the relocation reimbursement which was taxed as income on your check, then your employer MUST debit your 2007 income to reflect that repayment.