Corporate Relocation - Tax Consulting
Palmer Moving Services can offer gross-up and tax consulting services that fit the wants and needs of your company and the employees you transfer.
A lot of mystery surrounds gross-up methodology and how to effectively administer the benefit to both your transferees and the payroll department in a proper and timely manner.
Some common relocation benefits that often apply are:
- Final move expenses
- Rental Assistance
- Storage Fees
- House Hunting Expenses
- Temporary Living
- Lease Break
- New Home Costs
- Loss on Sale
- Spouse Allowance
- Lump Sum
- Miscellaneous Expense Allowance
- Home Sale Bonus
- Cost of Living
Once an organization determines on which expenses to provide tax assistance, decisions must be made on how the company is going to gross-up the expense. We begin by helping you sort through the four primary gross-up methods:
- Supplemental – The most commonly used method, by which you calculate the transferee’s total taxes due using the IRS’s Supplemental Rate Table. This option, however, does not take into account the phase out of deductions, exemptions and child credits.
- Statute or Tax-Return – With this method you calculate what a transferee’s tax return would have been before and after receiving expense reimbursement. The difference between the two calculations is the gross-up amount – resulting in a blended tax rate, which does take into account the phase out of deductions, exemptions and child credits.
- Flat-Rate – You determine a fixed percentage to be used in the tax-assistance calculation. This method does not take into account the phase out of deductions, exemptions and child credits.
- Marginal – This method calculates the transferee’s estimated taxable income before receiving the relocation expense reimbursement. You then compare the estimated taxable income to the IRS Tax Tables. The tax table rate is then used to determine the tax assistance amount for that expense. The tax rate will not change for the expense and therefore is not blended.
Determining a company’s gross-up methodology and tax reporting is a very important decision – not only for the company but for the employee as well!
Contact your Palmer Moving Services representative today to find out how we can help you sort through your policy!