I received a relocation package from my employer for a move in 2016. I decide to leave them in March 2018 and will have to pay 1/3 back.
1) should I ask for tax already paid related to the repayment back (eg FICA)?========>it depends; under the Non-Accountable Plan, you do not have to substantiate the expenses or return advance payments in excess of the amount actually used.In this case, the IRS treats payments made under non-accountable plans as taxable income. When an employee?s expenses are allowed or reimbursed under a nonaccountable plan, the employer must report the amounts paid under the plan as wages on the employee?s W-2 Form. Moreover, such amounts are subject to withholding and to the payment of employment taxes, such as FICA, FUTA, RRTA, and RURT. Amounts paid under a nonaccountable plan are included in the employee?s gross income. Expenses attributable to amounts included in gross income are deductible by the employee, subject to all applicable limitation.However, an accountable plan is a reimbursement or other expense allowance arrangement that satisfies three basic requirements: a business connection; substantiation; and return of excess amounts. An accountable plan requires that the employee substantiate all expenses by submitting a record, receipts, or any other type of substantiation to the employer. Additionally, any excess reimbursement or allowance must be returned to the employer, which is any amount not recorded as an ordinary and necessary business expense. Generally, records are recorded in a diary or a log. Substantiation is provided by adequate records, which must list the amount of the expense, time and place of travel or entertainment, business purpose, and the business relationship between the taxpayer and any people being entertained or receiving a gift. Additionally, lodging expenses and any other expense of $75 or more must have documentary evidence, such as receipts or credit card statements to support the expenditure; otherwise, the taxpayer may have to provide a written or oral statement of expense details.
If the business data is not provided with the expenses for any given day, then the employee must return the per diem allowance for those days to the employer to maintain the plan as an accountable plan. Excess allowances over the per diem rate are taxable as wages. If expenses exceed reimbursement, then the excess expenses can be claimed on form 2106with the net amount claimed as a miscellaneous expense that is subject to the 2% AGI floor on Sch A of 1040. Hence, unreimbursed expenses can only be deducted if the employee itemizes; otherwise, the deduction has no value. Because the deductibility of meals and entertainment expenses is restricted to 50% of their cost, if the employer has not done so, then the employee may have to allocate any excess expenses over reimbursements between meals and entertainment and other expenses.
2) with the tax reform, will I be able to deduct my repayment?=========>>as mentioned above.
3)the relocation include tax gross up. will I have to pay them back for these gross up under the new tax reform?=========>>it depends on; as said, you neeed to pay back under the accountable plan aslongas you return any unused funds to your ER;however, if your ER does not require employees to document their expenses and return excess amounts to him, their reimbursements are taxable. Ithen the ER needs to include them with the employee's wages in Box 1 on his Form W-2 and record the reimbursements as wages on his own books, which means he must include them when determining his payments for unemployment taxes.