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URL:  http://boards.fool.com/assuming-that-the-5000-was-grossed-up-for-22410146.aspx

Subject:  Re: Oprah and tax trouble? Date:  4/26/2005  8:55 PM
Author:  TMFPMarti Number:  78978 of 121219

Assuming that the $5,000 was grossed up for federal and state income tax, payroll tax, etc. the $5,000 net is still not "tax free" in the sense that one just forgets about it like a gift from Aunt Sue. I would assume that the W-2 would include the grossed-up amount as wages and the taxes paid by the employer in the respective boxes for taxes. Right?

Right. Many employers with more generous moving allowances than are present in the tax law, including the US Government, use this method for making the employee whole with respect to the moving allowance. It all shows up as taxable income on the W-2, along with the appropriate withholdings.

Phil
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