Hot Topics, Relocation, Taxation

Tax Reform Eliminates Moving Expense Deduction-The Impact on Corporate Relocation

The finals days of 2017 saw the House/Senate pass the most sweeping change to US tax code in decades;  the Tax Cuts and Jobs Act.   The act, now signed into law, includes changes that will impact relocation and talent mobility programs.

Perhaps the biggest change to the tax code is the elimination of the exclusion/deduction for moving expenses such as the shipment of household goods, storage, and final move costs.   For corporations that gross up for taxable reimbursements, this will result in thousands more in tax gross-up dollars per transferring employee. Written policy language will also require revision along with necessary adjustments to relocation budgets to allow for the increased cost of tax gross up.  The average company cost for moving/storing household goods of transferring employees and final move is over $14,500.  It is important to remember that corporations can still deduct moving expenses it pays to or on behalf of employees.

Prior to passage of the Tax Reform Bill certain moving expenses were considered excludable/deductible if certain criteria were met. The criteria included meeting the time and distance tests.  The transferring employee needed to commence work in the new job (at the new work location) and work full-time for at least 39 weeks within the first 12 months after the move.  He/she also needed to demonstrate that the new place of employment was at least 50 miles away from the old home than the old place of employment.   The new tax reform law effectively negates the need for the above criteria since moving expenses are no longer deductible/excludable.

 Additional Relocation-Related Tax Reform Implications

  • The mortgage interest deduction was reduced to $750,000 from $1,000,000 for mortgages originating on or after December 15, 2017. This is likely to affect transferring employees looking to purchase homes in higher cost of housing areas.  Recruiting talent to relocate to these areas could become problematic.
  • The state and local tax deduction is now capped at $10,000 in 2018 through 2025. This again could impact employees transferring into higher tax states as the cap will decrease the ability to deduct these items.
  • Tax Rates and Income Brackets:  The law’s seven federal tax brackets will now have the following rates:

Relocation America International is actively working with our clients and prospects to insure their programs are fully compliant with the new tax law and relocation policies are updated to reflect the new tax reality.

The above information is for general information only and is not presented as tax advice. Please consult with your tax advisor prior to making decisions and taking any action.  For more information contact us at info@RAInternational.com or visit www.RAInternational.com

Hot Topics

Shelly Bishop Appointed to the Worldwide ERC Ambassador Committee!

We are pleased to announce that Shelly Bishop, Director of Global Business Development for Relocation  America International, has been selected by the Worldwide Employee Relocation Council to be part of the Ambassador Committee for the Americas Mobility Conference being held May 17-19 in Atlanta, Georgia, USA.

The purpose and scope of the Ambassador Committee is to positively represent Worldwide ERC® – its vision, mission and initiatives – at industry events and to others who could benefit from our industry information. The Committee provides support to the value proposition of membership with Worldwide ERC® and encourages participation from existing and future members.

In addition, Shelly is also a featured speaker at the conference.  We look forward to networking with industry colleagues and gaining new insights into employee global mobility.  For a complete list of speakers please click on the link below:

http://www.worldwideerc.org/amc17/events/Pages/AMC17-Speakers.aspx

See everyone next month!

About Relocation America International

Relocation America International is a full service relocation management company headquartered in Southfield, Michigan dedicated to providing innovative relocation services, value added support, and superior service to clients relocating families domestically and internationally.

Visit http://www.rainternational.com for more information about our services or contact us at mobility@rainternational.com.

Global News, Relocation

Global Mobility and Immigration Updates from the ASE 2015 Global HR Conference

UntitledDave Foess, VP of Global Business Development for Relocation America International, was in attendance for this year’s American Society of Employers Global HR Conference held at the University of Michigan campus in Dearborn, Michigan on August 18th.

The event titled “Putting the Expatriate Mobility Package Together” was sponsored by Deloitte and centered on global compensation and mobility from the HR side of the equation. A number of pertinent topics were examined in great depth including global immigration trends, international employment law, and expatriate mobility packages.

Current Global Immigration and Mobility Trends

Most companies today are focused on the rapid deployment of talent, attracting top talent, compliance, and minimization of negative publicity. Other current global immigration trends identified during the conference include:

  • Short term assignments comprise most employment-based immigration compliance violations
  • Financial exposure to companies is increasing due to the large volume of employees on assignments. The continued increase in offshoring and cross border joint ventures is cited as a main reason why expatriate assignments are increasing.
  • With increased focus on security, there continues to be an impact on immigration processing the “on arrival” experience for international travelers.
  • Global companies continue to promote short-term assignments to avoid overhead and tax costs associated with long-term assignments.

Unstable political environments, including tensions and current events, continue to impact visa processing and mobility of global talent.  Where high unemployment continues to be a concern, compliance and worksite enforcement efforts remain focused on protecting local workforces.

Other factors continuing to impact global mobility include

  • Family issues
  • Dual-career issues
  • Career progression
  • Working remotely
  • Personal safety
  • Increased technology
  • Cost containment directives
  • Diversity issues

Overall the conference offered a great opportunity to network with top HR professionals and gain knowledge about those issues which are impacting both global immigration and global mobility. For more information regarding current global immigration trends  examined and discussed at the American Society of Employers Global HR Conference, click on the following link:

Global Immigration Trends

 

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