Have a Tax Question? Ask a Tax Expert
There are several different rules that determine how the reimbursement from your employer should be treated. The IRS defines a reimbursement as either being paid under the "accountable" mthod or "non-accountable" method. The basic difference is in whether or not you keep a record of your exact expenses and return any monies that your employer over-reimbursed you. Basically many of your moving relocation expenses are deductible on your return, so any expenses you have incurred will probably offset any reimbursement given to you by your employer. IRS Publication 521 really gives clear details on how to handle the reporting of moving expenses and reimbursements from employers. It is unlikely that you will actually end up owing tax when it is all said and done, but in any case, this will be reportable on next year's tax return and is not something you need to handle immediately. Here is a link to Pub. 521 for your reference.
If this answer has been helpful, please press the "Green Accept" button. Positive feedback is also greatly appreciated. Thanks for the question and have a great day.
The previous post I made regarding the fact that you will not be accountable for this until next year's return, refers to your personal tax return only. Your employer may or may not withhold taxes from the reimbursement they are giving you, depending on whether or not the reimbursement was made under the accountable or non-accountable plan. If this was made to you under an accountable plan, then taxes should not be withheld. Here is a link to the IRS rules that you can print out and go over with your employer. http://www.irs.gov/publications/p521/ar02.html#d0e1725
Even if your employer does end up withholding some tax from the payment he makes to you, at the end of the year you may still be eligible for a refund for all or some of the taxes withheld. It really will depend on how much your employer paid you in relation to what your actual expenses were.
If you found this answer helpful, please press the "accept" button. Thanks again.