Discussion:Mortgage Interest Payment - Taxable?
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Discussion Forum Index --> Advanced Tax Questions --> Mortgage Interest Payment - Taxable?
Discussion Forum Index --> Tax Questions --> Mortgage Interest Payment - Taxable?
| 19 September 2008 | |
| Quick question for everyone - help is appreciated:
An employer, as part of a relocation for an employee, will pay that employees Mortgage Interest on their old house for 6 months after the move. Is that payment taxable to the employee as compensation (and thus withheld upon) or is just treated as a reimbursement?? Thanks | |
| 19 September 2008 | |
| Correction - I meant to type just mortgage payment, not mortgage interest.
Thank you. | |
Death&Taxes (talk|edits) said: | 20 September 2008 |
| I take it you are asking for the employer, not the employee? Publication 15-B seems to only cover actual moving expense, and when to withhold or not, but here these payments would certainly be income. The only question is whether the employer is required to 'gross them up' to include the taxes, including FICA and Medicare. | |
Harry Boscoe (talk|edits) said: | 20 September 2008 |
| I hate myself when I split hairs, but nothing in Pub 15 or 15-B would require anything to be "grossed up" - the employer might choose to do that, to cover any required withholding, but in that case the "grossing up" would be a voluntary, and quite generous, gesture on the employer's part. The employer would otherwise have to take the required withholding out of the employee's "cash" paycheck but then the employer should be ready to remind the employee that just paying the mortgage is quite generous (cuz the employee is likely to whine about .. about .. about having to pay his own taxes....) | |
Death&Taxes (talk|edits) said: | 20 September 2008 |
| I agree, Harry, that it is voluntary, though presumably FICA/Medicare would have to be covered. Many years ago 'gross up' was the norm among the IBMs, AT&Ts etc, but our world is changing fast. Essentially the employee is obtaining this benefit for the cost of his tax bracket, which as you remark, is a good deal. Of course, in a gross up, the employer does receive the deduction, but as we know, some corporations pay little or no tax today. | |
| 22 September 2008 | |
| Thanks for the help guys - I am asking from an employers perspective. I assumed paying a relocated employees mortgage was income but I wanted to make sure I could find some backup for that thought. Any other suggestions or thoughts?? Thanks again. | |
| 22 September 2008 | |
| It may also be considered as an employee benefit as an inducement to make the move. | |
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