A bonus is taxed by the IRS as ordinary income. And so is this payment for moving expenses.
Sometimes they allow you to decide if you want it tacked onto a regular check or as a separate check.
- When done separately it is withheld at a flat rate. That flat rate is currently at 22%.
- If it is done as part of a regular check it will cause a significantly higher amount to be withheld for that check. That is becasue the IRS tax tables used by employers assumes that the check being processed is typical of all your checks. That means that a person who normally has a gross of $2,000 a check is treated by the tables as making $52,000 a year, but when they get a bonus of $5,000 added to a regular paycheck it assumes they make $7,000 a check or $182,000 a year.
In the end it doesn't matter which way it is withheld. When you file your taxes in April the tax is the same only the amount withheld changes, which will impact your refund or if you have to send the IRS more money.
In some cases one option is better than the other, depending on how much is being withheld on your other checks. This treatment of bonus is frequently confusing. In the end it doesn't matter to your final tax, it just lets you pick which path to take.
The treatment of moving expenses reimbursed by your employer changed significantly in 2018. They are now ordinary income. You will pay Federal taxes, FICA, and if applicable state taxes on the money they reimburse.