Employer reported Relocation income from previous year in next year W2

[LdiJ]

Yeah, I'm thinking about amended return for the prior year, I will still loose money cause income for the prior year is way lower.



Why you think its not the correct way?
Don't like it myself, but don't know what else I can do.

Because you did the prior year correctly in the first place. Solving the problem using an incorrect method (amending the prior year) is not generally recommended.

 

[davew9128]

Complicating the matter, is that OP is in California where the moving reimbursement is not taxable...

 

[LdiJ]

Complicating the matter, is that OP is in California where the moving reimbursement is not taxable...

Maybe that means that he doesn't have a problem with CA. I am reviewing the CA forms and I cannot find a spot to deduct out relocation expenses that would be included in the W2, however if they were originally deducted out for CA on the prior year and would be deducted out for CA for the following year then at least the amount of tax he would have paid to CA for both years would be accurate.

It is the IRS he is dealing with right now, so maybe all is good with CA.

 

[stridder]

Complicating the matter, is that OP is in California where the moving reimbursement is not taxable...

More specifically I was in CA for the whole 2nd tax year of interest. Moved to CA in 1st tax year of interest.
Does it apply to relocation paid as lump sum?
Could you please point to smth to read about CA moving reimbursement not taxable?
I.e. I did not need to provide receipts to employer.

 

[stridder]

Maybe that means that he doesn't have a problem with CA. I am reviewing the CA forms and I cannot find a spot to deduct out relocation expenses that would be included in the W2, however if they were originally deducted out for CA on the prior year and would be deducted out for CA for the following year then at least the amount of tax he would have paid to CA for both years would be accurate.

"State taxable gross -CA" increased by same relocation amount in the 2nd year in the same paycheck.
Need to double check what I did for state tax, most likely did not deduct it for any year.
Usually do tax with tax software and simply answer its questions.

 

[stridder]

It is the IRS he is dealing with right now, so maybe all is good with CA.

Agree, until I figure out what to do with federal tax, there's not much sense to do amendment of state tax.

 

[stridder]

Guess need to specify years:
2019 - 1st year when relocation was paid.
2020 - 2nd year when employer reported "voluntary deduction".

 

[davew9128]

Maybe that means that he doesn't have a problem with CA. I am reviewing the CA forms and I cannot find a spot to deduct out relocation expenses that would be included in the W2

You're not finding it because it is a taxable payroll adjustment on the W-2

 

[stridder]

You're not finding it because it is a taxable payroll adjustment on the W-2

could you explain what this means for dummies like me?
Relocation should not be included as taxable income in W2 for CA state?

 

[stridder]

If you were told to fill out form 4852 then you are to fill it out with the same information your employer would use to fill out a corrected W2. However, that is something that I strongly recommend that you get a local tax professional to help you fill out. The more you tell us about your situation the more I believe that you should not be attempting to do this on your own.

I'll still be afraid to file 4852 completed by tax pro, if I don't understand the legal basis for not/including relocation in field 7a.
Responsibility for filing incorrect 4852 will be still on me, correct?
One doesn't need much experience to substract relocation from current W2.

 

[Taxing Matters]

I'll still be afraid to file 4852 completed by tax pro, if I don't understand the legal basis for not/including relocation in field 7a.
Responsibility for filing incorrect 4852 will be still on me, correct?

Yes, you are ultimately responsible for the return. However, depending on the mistake, you may be able to avoid a penalty if it was prepared by a tax professional on the basis that you relied on a competent tax professional to prepare the return correctly. If you do it yourself, you won't have that same option if you screw it up.

 

[LdiJ]

You're not finding it because it is a taxable payroll adjustment on the W-2

Oh, so the employer adjusts the state tax to reflect the relocation money? That makes sense. So, the OP would likely have included it on his 2019 return. Geez...I cannot imagine trying to fight that amendment with CA. I hope that they did at least do the W2 right (in that respect) for 2020.

 

[stridder]

I hope that they did at least do the W2 right (in that respect) for 2020.

Per paystub employer included relocation in taxable income for 2020.

Anybody knows if CA FTB can request corrected W2 from employer?
I'm not even in CA anymore, so it would be hard to find tax pro to do state tax amendment.

I appreciate all of you guys help a lot!

 

[davew9128]

Oh, so the employer adjusts the state tax to reflect the relocation money? That makes sense. So, the OP would likely have included it on his 2019 return. Geez...I cannot imagine trying to fight that amendment with CA. I hope that they did at least do the W2 right (in that respect) for 2020.

No, perhaps I didn't make it clear. The relocation isn't taxable in CA, so if it was included on the Federal taxable W-2, it would not be for state taxable wages with the state W-2 amount being lower by that amount, at least if done correctly. CA didn't conform to TCJA, so it operates under the old Federal rules when qualified moving expenses were a tax-free reimbursement.

 

[LdiJ]

Per paystub employer included relocation in taxable income for 2020.

Anybody knows if CA FTB can request corrected W2 from employer?
I'm not even in CA anymore, so it would be hard to find tax pro to do state tax amendment.

I appreciate all of you guys help a lot!

Per paystub or per W2?

If W2 is the amount in box 1 the same as the amount in box 16, or is box 16 smaller?