Hello, I moved to a new job last year. The company paid me total 12,912 lump sum. They then added the "grossed up" amount 20,709 for this move to my W2 wages (so that I have to pay tax on this entire amount). They say the difference 20709 - 12912 is paid for taxes by the company.

I do not understand why I am paying taxes for this entire amount of 20,709 ? Should'nt I be paying taxes only on 12,912 (which I actually received) ?

Thanks.