Is a relocation bonus taxed at the time of payment by my employer?

Relocate to Atlanta

Yes, income tax is required to be withheld. Irregular payments such as bonuses are subject to Federal income tax withholding at a statutory rate of 25%, plus FICA and Medicare taxes. Your state may mandate a statutory rate as well. Figure 33% to 40% for total withholding depending upon your state’s rate.

If this is enough to kick you into a higher tax bracket than 25%, bear in mind that the amount withheld won’t be enough to cover the total tax debt. You may need to make an estimtated payment using Form 1040-ES in this case if the debt will leave you owing over $1,000 at filing time next year.

Relocate to Atlanta

a relocation bonus is considered regular compensation as any other bonus, a thank you of sorts – as opposed to reimbursement for real moving expenses, which they may or may not cover in addition to your bonus.

so withholding applies.

Relocate to Atlanta

Most of it depends on if it will be deductible. If you don’t have to account for the expenses then you will have withholding.

And, it will be at 25% plus FICA/SS.

Hope this helps.