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virginiaresiden · Feb 17, 2009, 02:59 PM

We recently were forced to move our of our apartment building so it could be renovated. All tenants were required to move by a specific date. Under local regulations, the landlord or rental company was required to pay each unit (not individuals but one amount per apartment) a "relocation payment" the amount of which is designated by the local government. We received this check, which is intended to be used "for reasonable costs directly associated with temporary or permanent moves within or outside the property" according to the local regulations. No taxes were deducted from the check. But now we've received a 1099-misc for the same amount, listed as "non-employee compensation." This seems wrong to me since it was not an incentive (i.e. free rent to get us to move in) or an exchange for rent (i.e. we performed some kind of service). What can/should we do if the landlord won't rescind it? We didn't save the receipt from our movers since we weren't expecting this, and to be honest I don't think the company we used will have records if we called.

ebaines · Feb 17, 2009, 03:04 PM

They sent you a 1099 because reimbursements for moving expenses are taxable. And unfortunately your moving expenses aren't deductible because you didn't move at least 50 miles or for purposes of changing your job.

virginiaresiden · Feb 17, 2009, 03:15 PM

If the amount were under $600 each, and we file jointly would we still have to report it? If we end up paying taxes on this, it won't come close to covering the movers and one-week overlap in rent. There was no leftover funds after those moving expenses were covered.

ebaines · Feb 17, 2009, 03:44 PM

You must report all income that is documented on a 1099, just like a W2. The IRS gets a copy of the 1099, and they will notice if you don't report it.

As a side note, when employers reimburse employees for moving expenses it is common for them to "gross up" the amount so that the employee can pay taxes and still be properly reimbursed. For example, if the company is to reimburse you $1000, they would actually pay you $1250 (assuming a 20%tax rate), so that after $250 is paid to the IRS the employee is left with $1000.

ScottGem · Feb 17, 2009, 04:06 PM

I would just double check this with your local government. If this was a govt mandated payment, the landlord MIGHT have been mistaken in reporting this the way he did.

AtlantaTaxExpert · Mar 11, 2009, 11:01 AM

I tend to agree with Scott. Moving cost reimbursements can be tax-free under certain circumstances, and I believe that this move meets those circumstances.