Employer moving expense reimbursement - how to fix & CA conformity - Spidell

Employer moving expense reimbursement – how to fix & CA conformity

Log in to Post

Message Board Employer moving expense reimbursement – how to fix & CA conformity

This topic contains 1 reply, has 2 voices, and was last updated by Lynn Freer 2 months ago.

  • Author
    Posts
  • #161358
    Mark Bole
    Participant

    An employer paid $5K moving expense (into CA) for a new employee in 2018 but excluded it from employee compensation.  This is now taxable compensation to the employee under TCJA, so 2018 W-2 and one Form 941 will have to be amended/corrected? And the employer will deduct the $5K as employee compensation expense.

    The Spidell Tax Update for TY2018 mentions one sentence about how for CA payroll taxes the moving expense is still taxed.  But for income tax purposes, it is still excluded?

    So confirming, the employee’s 2018 W-2c will reflect no change to state wage income, but will show a $5K increase to SDI taxable income?  And a DE-9/DE-9C amended will have to be filed for the quarter affected?

    Employer plans to gross up a reimbursement to the employee to cover the extra taxes.  This will be compensation expense and payroll tax expense for 2019, for the employer? (cash basis) And taxable income to the employee (fed and state).

     

  • #161480
    Lynn Freer
    Participant

    For CA purposes, the wages should not include the moving expense. The moving expense is subject to SDI and SUI. Yes, I believe the gross up will be included in wages for both federal and CA in the year the employer pays the gross up amount.