[Talany2004]

Hi,

I'm going to be transferring within my company from the Washington, DC area to San Francisco. I've received a transfer package which includes the relocation package. I'm not sure what the rules are from a tax perspective, but I thought there were slightly different tax rules based on relocation expenses. The package I have received from my employer is is a lump sum bonus and it will be paid for by the San Francisco office. What tax rate would this be taxed at? Are there any additional tax implications based on the fact that it's a relocation package?

Thanks.

Talany2004

[AtlantaTaxExpert]

If it is a true lump sum bonus, they will withhold 30% for income taxes, as well as 7.65% for Social Security and Medicare, plus about 6-10% for California state income tax.

What the actual income tax rate is for federal and California taxes depends on your total income picture.

Since the relocation bonus is probably your reimbursement for moving expenses, some (but not all) of your moving expenses are deductible as an adjustment to income. You will have to file Form 3903 with Form 1040.