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Brian Michels
Brian Michels, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 162
Experience:  Partner at Michels & Hanley CPAs, LLP
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That would be great. I was relocated to a different state

Customer Question

That would be great.
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: I was relocated to a different state and the expenses were grossed up at a 25% tax bracket rate, but I'm in the 33% including my wife's income and the gross up amount. So I now owe quite a bit of money. Am I just stuck with this?
JA: Is there anything else the Accountant should be aware of?
Customer: I don't think so
Submitted: 6 months ago.
Category: Tax
Expert:  Brian Michels replied 6 months ago.

Hello. My name is ***** ***** I'll be the Expert assisting you today. I look forward to helping you with your issue. Federal tax law allows you to deduct your moving expenses if your relocation brings you to a new area. If your new main job location is at least 50 miles farther from your former residence than your old main job location you meet the distance test. Deductible moving expenses include reasonable expenses for moving your household goods and personal effects and traveling (including lodging but not meals) to your new home. You have to reduce these amounts by any reimbursements received from your employer. If, after you take into account any moving expenses, your tax is still high it could mean that there was not sufficient withholdings on the income and you must pay it to the IRS when filing the year end tax return.

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Customer: replied 6 months ago.
The issue is I didn't pay anything. The company paid everything directly to the vendors then added this as income on my w2 and only grosses it up at 25% when I'm at the 33% tax bracket.
Expert:  Brian Michels replied 6 months ago.

This is common. Unfortunately, your employer did not withholding enough from your pay to cover the taxes. As such you received additional net pay in your weekly/biweekly paycheck that was too high. Since the withholdings didn't cover the full amount of the taxes due the additional tax due is accurate.