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Relocation amounts and new hires

edited September 2010 in General Payroll Topics
hi! quick question and I am sure I know the answer, but
scenario:

new hire - who needs a relocation allowance. HOwever, they need to move before they start with the company.

Do we - A) put it through A/P and issue a 1099 for the ee
B) get the hired into the system so we can pay them the allowance and it goes through Payroll
C) any other suggestions?
I am thinking get just enough information to hire them into the payroll system and issue it so it goes through payroll.
thanks!
Edie

Comments

  • It's not a 1099-MISC item because it's related to his employment. I'd put him on payroll, non-auto paid, and watch the benefit eligibility dates, so the earnings can be properly recorded and the taxes withheld accordingly.

    http://www.irs.gov/pub/irs-pdf/p15.pdf
    specifically, Chapter 5, first paragraph.
  • I had just assumed the poster was giving him a flat amount and letting him spend it however he saw fit, without having to reclassify it later. My bad. :(
  • hi! yes, we are just giving a flat amount that way we do not have to run into that non-taxable issues.
    I agree, we will have to put them on the payroll, easiest way
    thank you for all your help!
    Edie
  • yes, we are just giving a flat amount that way we do not have to run into that non-taxable issues.
    I agree, we will have to put them on the payroll, easiest way
    It is supplemental pay and, unless you paid regular wages to the employee at some point during 2010 or 2009 (prior to the payment of the relocation allowance) the optional flat rate method (25% rate) may NOT be used and the payroll period (bi-weekly, semi-monthly, etc.) is what the employee's regular payroll period will be once the employee starts working.
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