Relocation Expense Reporting: Tax Gross Up and Relocation Policies
Relocation Expense Reporting: Tax Gross Up and Relocation Policies
Most business owners and managers know that understanding taxes, tax laws, and regulations is best left to the professionals. This is especially true when you are talking about relocation policies and tax gross up. It's important to hire a Relocation Management Company (RMC) who will follow through from beginning to end of the relocation process, including gross up tax assistance.
The Danger of Inaccurate Relocation Expense Reporting and Gross Up
Inaccuracies in reporting of relocation expenses and tax gross up can lead to a myriad of problems. Accounting departments often use a method called tax gross up so employees don't face tax burdens on relocation expenses covered by the company. Essentially, the amount provided to employees for relocation is enough to cover the related taxes from that income, as well. While tax gross up is a legitimate business practice, if it's not handled properly, gross up inaccuracies can lead to an audit, which could adversely affect your entire company. Don't take chances with a relocation management company that doesn't follow up with gross up tax assistance.
An inaccurate tax gross up affects:
The transferee
Your HR department
Your accounting and payroll department
Your entire company
How an Incorrect Tax Gross Up Affects Your Transferee
A tax gross up that is filed incorrectly sends the message to transferees that your company doesn't care about their needs, perhaps even after they're settled in and just begun to assimilate to the new location, the company culture, and the new position. Employees may need to file for a tax extension or may need to file an amended tax return because of incorrect W-2 statements. An extension or questions about a tax return could lead to delays in getting a tax refund at just the time when the employee may need the money the most.. Incorrect relocation expense reporting could also prompt the added burden of an audit.
How an Incorrect Tax Gross Up Affects Your HR Department
In many cases, the HR department is charged with the task of addressing the new transferee's dissatisfaction. Additionally, since relocation policies typically fall in the domain of the HR department, your HR staff is likely to be held responsible for the follow-up aspects of a relocation, including gross up tax assistance.
How an Incorrect Tax Gross Up Affects Your Payroll Department
Aside from the transferee, the hardest hit from a tax gross up error is the payroll department, who will need to issue revised W2 forms and may even face IRS scrutiny if tax gross up errors are discovered.
Look for an RMC that Provides Gross Up Tax Assistance
When you hire a Relocation Management Company to handle your firm's corporate relocation policies, look for a company that provides gross up tax assistance and, most importantly, has experience and stays current on tax laws as they relate to all aspects of relocation expenses and tax gross-up.
Like every step of the relocation process, gross up tax assistance should be customized to your company's unique needs and focused on relocation "best practices."
At Capital Relocation Services, our gross up tax assistance is incorporated into our unique low-stress relocation process. Our six-step LSRP is designed to emphasize follow-up, beginning and ending with the Relocation, Recruitment and Retention Review.
Our gross up tax experts are constantly studying and learning in order to make tax time as easy as possible for our customers and their transferees. Our tax gross up experts:
Use tax gross up software that is automatically updated with Federal and State tax changes throughout the year.
Stay up-to-date on the latest tax laws and regulations.
Adopt (and help create) the newest developments in "best practice" relocation.
Attend seminars and study industry publications to provide better service.
Relocation policies aren't "one-size-fits-all," and neither is gross up tax assistance related to relocation. Capital Relocation Service's gross up tax experts can:
Tailor tax gross up procedures to meet relocation policies and payroll schedules.
Provide a comprehensive report of all expenses that have a direct impact on a transferee's income and payroll taxes
Provide transferees with a specially prepared booklet that explains how relocation will affect their income tax, with tips regarding which aspects of the tax return will require special attention.
Be available by phone to help your payroll, accounting staff, or individual transferees with any questions regarding relocation expenses and tax gross up.
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