JR1 wrote:Mak, why is EE/ER FICA involved in this? It'll come from profit distribution. And any way that seems reasonable to compute the biz portion....is reasonable.
If the business is trying to deduct the moving expenses, which was the premise of the OP, then it would be a taxable fringe benefit to the employee. But yes, if the S-corp is just being sloppy and paying personal shareholder expenses out of the business account, then treating it as a distribution makes sense.
It would be far more business-like for the individual to pay the expenses (the bulk of which are personal) and then get reimbursed for the small portion that is business-related.
JR1 wrote:Move on, countless. Nothing to see here. lol
Fortunately, not everyone agreed with you.
For example, in post #11 the W-2 treatment is endorsed for certain circumstances. By treating the moving expenses as taxable employee fringe benefit, the S-corp lowers its taxable income at the state level, which was mentioned in post #15. And if the OASDI wage limit for the year has already been reached, then the FICA on the wage income is much lower.
lucyko wrote:My guess is the S-corp business portion is going to be small unless we are talking about an auto being one of the items shipped . I would think the office furniture and related equipment for the business would be very small compared to the personal items being shipped .
I agree with that -- other than a desk, chair, computer, and maybe a bookcase or table, is there really that much furniture in the home office? This is why an allocation based on square footage is not reasonable, since the home office does not share with the other rooms a typical assortment of household items (mattresses, dressers, flat panel TVs, clothing, kitchenware/dishware) that make up the moving expense.
Now, the auto is a different case -- I would consider deducting shipping for the auto to be aggressive, but I can't say it's wrong. But what percent to use for business? Doesn't the business-use percent of the auto change every year? And what if the auto is driven by the owner, instead of being shipped? Remember, travel and lodging for the move are not deductible for federal tax.
"moving costs are reported as an adjustment to income" -- not under TCJA (except military), but some states did not conform.