Because the tax aspect of any relocation is so important, clear and continual communication with the transferring employee is essential. A transferee should never be surprised at tax time with a large and unexpected payment due to the IRS. It is the responsibility of the transferring employee to understand the tax implications of each relocation benefit, but it is incumbent upon the employer and the Relocation Management Company (if one is involved in the process) to ensure that the tax implications of benefit usage are fully explained to the transferee verbally and in writing. Read More
To facilitate a relocation, many employers offer home selling assistance to homeowner transferees. Home sale assistance can come in various forms; however, the IRS specifically calls out the Amended Value (AV) program as the favored method in terms of compliance.
An AV program allows the transferee to market the property and attempt to find a buyer before the employer acquires the property and takes it into inventory. If the transferee finds a buyer, he sells the home to a third party Relocation Management Company (RMC) for the agreed-upon price, and the RMC, in a second and separate transaction, sells the property to the buyer for the same price.
Tax gross-up is a topic that relocation professionals routinely speak about among themselves but sometimes do not discuss adequately with relocating employees. Gross-up is a complicated subject and we sometimes wrongly assumed that tax discussions should be saved for the tax professionals—particularly if the employer is providing that service.
What is gross-up or tax assistance? In simple terms, an employer agrees to defray the taxes owed on a relocation benefit(s) on behalf of the transferee / assignee.
MILWAUKEE, Wis. (March 14, 2017)– TRC Global Mobility, an employee talent mobility company providing services for U.S., international and government clients, announced several changes to its executive leadership team, including four management promotions today.
Sean Lickver, CRP, GMS, was named TRC’s new President. He previously served as Executive Vice President. In announcing this promotion, Paul Haislmaier, TRC’s CEO and Chairman said, “Over the past two years Sean Lickver has played an integral role in TRC’s progress. His collaborative manner with employees and management, his ability to evaluate talent, his vision for the future and his knowledge of the global talent mobility industry are impressive. He has been a driving force in bringing TRC to where it is today and preparing us for where we want to be tomorrow. I look forward to continuing to work with Sean.”
Arguably, the most complicated discussions surrounding domestic relocations involve the tax piece. For any domestic relocation expenses to be qualified as tax deductible, there are a few requirements that must be met, including:
- The move must correlate with the start date at a new job location
- The employee must be employed full time for 39 weeks during the 12-month period following the first day of work in the new location
- The new place of work must be 50 miles farther than the commute from the old residence to the old place of work
- The expenses must have been incurred due to the move
- Only reasonable expenses are deductible
- There is no limit on the dollar amount of deductible expenses
For years, comprehensive immigration reform has moved through the U.S. House and Senate in stops and starts. The new administration has signaled a more aggressive stance on immigration right out of the gate, and Congress is expected to take up comprehensive immigration reform once again. In the meantime, a great deal of uncertainty will cloud the process for companies and candidates alike.
Talent knows no borders.
With more and more companies looking for creative ways to save money, many have turned to their relocation policies for areas in which to cut costs. One trend that has gained in popularity recently is the temporary domestic assignment (TDA).
The IRS defines a short-term assignment as one that lasts for less than one year. This is a very important distinction because the benefits change from non-taxable or deductible to taxable at the one-year mark. Companies that provide relocation tax assistance can save a considerable amount of money by not having to pay taxes on the benefits. Read More
Most companies understand the importance of candidate assessment for global assignments, and many tools exist to gauge the adaptability of the candidate and family. Increasingly, companies that want to protect their investment in a domestic move are applying the same thought process and using some of the same tools.
A Resume Isn’t Enough
Most of the time, whether for a global or domestic move, the first consideration is technical competence. Can the candidate do the job? While this is obviously critical, our global experience has shown that without the proper cultural fit and adaptability, the assignment is likely to fail.
The Benefits Of Benchmarking Domestic & International Relocation Policies
Companies benchmark their relocation policies to analyze process performance, evaluate their program against their competitors’ or to measure their program against their own divisional or location-related best practices.
If you have a mobile workforce, benchmarking your domestic and international relocation policies against the competition and other selected companies is critical, and your relocation management company can be a great help. Relocation management companies use technology to capture and evaluate data across many clients. They evaluate this data and share their insights with clients who are assessing their mobility programs. Read More