Relocation Taxes?

What happens with your taxes when you move to a new state?

QUESTION: Cindy and her husband are relocating to another state.  They got a $66,000 relocation package from his employer.  Most of that is taxable.  A portion of that package is for taxes and they have the option to take the withholding tax allowance.  What is that?  Should they take the withholding tax allowance?

ANSWER: Read what Norm Rollins says:

First of all, you can take moving expenses off the top.  Part of your allowance is for the moving expenses, mileage, truck rental, overnight stays, meals and all of that is deductible off the top. 

Then figure out the tax on the net amount of the relocation package.  For example, you may be able to write off about $22,000 and only owe taxes on $44,000 of that package.  They will withhold 25%-30% from that net amount and will calculate that for you. 

In your case, let them deduct the tax based on the net amount.