taxes and signing bonuses

denjen

We have a new employee coming in. He currently lives two hours away. His family will not move here for three months. What is considered taxable?
1 Is a real-estate bonus (10%of the sell of his house) taxable as income?
2. Commuting to and from work from 120 miles away once a week, for a transition period of three months considered income?
3. Is it counted as income to pay for his lodging while working here?

Are any of these just business expenses for the company?

Riva

I believe it all is taxable as it is considered additional income to the employee. I'm not an expert but these are my thoughts on this...

1. - yes it's taxable (additional income / bonus)
2. - yes it's taxable (regular mileage reimbursement)
3. - yes it's taxable (would recommend paying this as a flat amount as an adjustment entry)

NaeNae55

You can get details on moving expenses in Publication 15-B and Publication 521 from the irs.gov website.

I think these are all taxable. The real estate bonus is basically a signing bonus. The mileage reimbursement would be taxable as the IRS does not consider going to and from work mileage as tax-deductible. I am not certain about the lodging, but you can probably find the answers online or in the above publications. Your best bet would be to treat everything as taxable, making sure you complete his W-2 correctly. The employee then can write off any applicable deductions. You can also call the IRS and ask them, but be sure to write down the name and date and then call back 2 more times doing the same. If you get the same answer twice and you keep your documentation you will be ok if audited.

Good luck!

Nae