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My employer will be reporting nearly $40k in relocation expenses, all directly paid by the employer to the respective companies. (Moving company, etc.)

What kind of tax liability am I going to have? Everything I've read online simply talks about "lump sum" relocation or "reimbursed." Nothing about expenses that the company directly pays for.

What am I going to be on the hook for?

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If all of the relocation expenses are paid by your employer to the moving companies, then you should not have any tax liability for those payments. Relocation expenses should be treated as normal business expenses by your employer. Note I emphasize "should" because it's possible that your employer "could" consider it income to you, but companies generally do not go out of their way to classify normal business expenses as income since it costs both them and you more money in taxes.

As a side note, the reason your company is paying these expenses directly is probably to lessen the likelihood of these expenses being questioned in an audit (in comparison to if they cut you a reimbursement check which could get more scrutiny).

  • If your employer does report them as payment to you, then you paid the expenses, not them. In that case, they are deductions for you (assuming you meet the appropriate IRS tests). – David Schwartz Dec 7 '16 at 21:24
  • @DavidSchwartz - depends on how they report them. If they are exact amount reimbursements they shouldn't be considered wages or subject to FICA, and can't be personally deducted either. – TTT Dec 7 '16 at 21:33
  • Right, it has to be one way or the other. Either they paid the expenses or you did. They cannot take an intermediary position. If they paid the expenses, all the taxes are their problem, and you didn't receive anything from them. – David Schwartz Dec 7 '16 at 21:38

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