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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29580
Experience:  Taxes, Immigration, Labor Relations
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I am been asked by my company to relocate from Australia to

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I am been asked by my company to relocate from Australia to the USA (Colorado) for a 6-12month period. I will need to relocate my family (wife and 3kids) and the company is offering a $10,000 per month housing allowance as a part of my relocation. Will this amount be tax free automatically, or if not, how can it be structured to be tax free? Many thanks for the advice!

LEV :

Hi and welcome to Just Answer!
According to the US tax law - housing allowances are treated as wages and are taxed as wages.
Your employer may not not to report housing allowances as taxable wages to you.
However - because your assignment will be temporary - less than a year - you may deduct travel expenses - transportation, meal and lodging.
Another option - if your employer set an accountable reimbursement plan - part of housing allowances may be paid through this plan as travel expenses.
Let me know if you need any help.

Customer:

Do you mean that my employer has a choice of whether it will report the housing allowance as taxable wages?

Customer:

are their restrictions on the amount and type of travel expenses that I can deduct from my taxable income?

LEV :

Yes - that is correct - your if your employer reimburses under an accountable plan - these reimbursements will not be taxable for you. However it is unlikely that your employer may pay you the full amount under an accountable plan


To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules.


1.Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer.


2.You must adequately account to your employer for these expenses within a reasonable period of time.


3. You must return any excess reimbursement or allowance within a reasonable period of time.


An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer.

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