relocation contract

I am in a relocation contract that requires me to reimburse the company for the relo funds plus gross up taxes should employment terminate for any reason within 6mo or less at 100% repayment. It also states I may not claim the relocation funds for tax purposes if that employment terminates within 1 yr of the relocation. I have received a W2 showing the funds deposited and the taxes paid for those funds. I need to know if my current employer can receive the full amount of the relo and taxes and still claim them for the business? I would think if they claimed them then I should get an amended W2 showing the relo paid back but the taxes paid by me back to the company still on the W2. Is this correct?

2 answers  |  asked Feb 13, 2014 6:34 PM [EST]  |  applies to Ohio

Answers (2)

David Neel
I agree.

posted by David Neel  |  Feb 14, 2014 09:32 AM [EST]
Neil Klingshirn
Good question, but the answer is a tax answer, not an employment answer, so I will be of little help. Nonetheless, I will give it a try.

Based on my non-legal understanding of how the tax code works (and not as a tax attorney), and assuming that this all happened in the same tax year, I think what happens is you pay back the gross amount, you do not include the gross relo payment in income, and you get a refund for the tax withheld. That way, you end up where you started, tax-wise, meaning no relo check but no tax bill.

If the relo payment and repayment are in two tax years, it gets more complicated. In either case, your best bet is to check with an attorney or tax preparer.

posted by Neil Klingshirn  |  Feb 14, 2014 07:28 AM [EST]

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