Q: We have been asked to pay an employee a lump sum amount to cover the cost of relocating him and his family. The amount would not necessarily be equal to the expenses incurred as it is a set amount paid up front, so I wanted to understand if this should then be taxed as a lump sum?
A: If not for actual reimbursement (There a range of expenses that are covered under reimbursement) and is being paid up front it would be a taxable payment and taxed as an extra pay.