My Ex-company is robbing me...Need Help?

Question

I work at MDSHA as an in house consultant, and they moved from North of Baltimore to the South, so my parent company, which is based in IL, reimbursed me for the relocation in the month of March, but just because of the move, MDSHA is loosing considerable amount of its old generation employees, who do not want to travel long distances, I was offered a job with MDSHA, in the month of May and I accepted it. This pissed my company off, and they deducted the relocation amount from my final pay check. Can they do that when there was no written agreement of how long I will stay with the company after they do any sort of favors. The amount for the relocation if $1650 and they have already deducted it, but still shows in the pay check as "Year--to-date-earnings" and I will land up paying 25% of that i.e. $412.5 to IRS as Taxes, so in all I am loosing more than 2000 dollars. How can they show that as my earning if they have revocked their favor back. In short: they paid and then took it back.

Answer 1

You first need to make every attempt to resolve this with the company.  Document everything you do in that attempt.  If they don't come around you can take them to small claims court or the labor board in your state.  Do all of that before they issue you a W-2 at the end of the year.

Answer 2

Your W-2 should reflect the fact that they took the $1650 back.  (Your withholding won't change because that was already sent to the government and is reconciled on your tax return...so no, you didn't lose $2000.)

If your W-2 doesn't, request a new one.  Alternately get a signed letter that says when you paid the money back and KEEP the paystub that shows the deduction.  

If you pay the money back in the same year, you won't pay income tax on it.  If you pay the money back in a different year than when it was given to you, you get a lousy schedule A deduction that many people can't use.

Relocation amounts are almost always contingent on you working at least 39-52 weeks at the new location.  

Since the company was reimbursing you as part of your wages (based on your comments), you were paying for your move anyway.  On your taxes, you would add a form 3903 and take a deduction for the cost of the move.