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TexLaw, Attorney
Category: Legal
Satisfied Customers: 4430
Experience:  Lead trial/International commercial attorney licensed 11 yrs
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I am moving out of state New Mexico to California. My new employer

Customer Question

I am moving out of state New Mexico to California. My new employer offers me two possible options:
1. Give me a lump of sum to cover my relocation expenses or
2. To reimburse me for relocation and plus my new rent reimbursement up to the certain amount of money.
I've been told that they will subtract tax from lump of sum (~40%) if I choose option 1.
If I choose option 2, will be reimbursement tax free or I will need to pay TAX in the end of the year? How much?
Submitted: 4 years ago.
Category: Legal
Expert:  TexLaw replied 4 years ago.

Thank you for your question.

Under option 2, you will have to pay tax on this amount as well. It will be reported on a 1099 as income given to you by the new employer. Moving expenses are generally deductible up to a certain extent on your income taxes. Thus, in my opinion, if you are able to cover the costs yourself and don't need the money up front, it is better to take the reimbursement.