Tag Archives: global mobility

The New Tax Reform Act and Relocation/Cause and Effect

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 mobility@RAInternational.com or visit www.RAInternational.com

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.

Talent Mobility in China Survey: Volume Remains Stable, Focus on Local Talent Development Rising

index

Worldwide ERC®, the workforce mobility association, has released the findings of its 2016 Talent Mobility in China survey. Worldwide ERC® analyzed assignment volume and location activity, trends impacting mobility policy and key challenges in the region.

Highlights of the results include:

Mobility Volume Remains Stable, Trend Expected to Continue

  • A majority of companies report moves into China, localization of expatriate employees, and moves of Chinese nationals outside of the country all generally remained stable or increased in 2015 and that these trends are expected to continue in 2016.
  • Shanghai (87 percent) and Beijing (57 percent) remain the top two destinations for expats. While Guangzhou and Fuzhou tied for third place in a 2013 survey, this year’s results show Guangzhou and Shenzhen tying for third place, at 20 percent each.

Cost-control Goals Result in Focus on Assignment Types, Developing Local Talent

  • A clear majority of respondents cite high levels of pressure from management to reduce assignment costs.
  • Developing local talent continues to be a key component of companies’ cost-control strategies.  When asked to rank various cost-lowering measures “reducing the number of traditional long-term assignments” and “increasing the focus on training local talent” were the top two, used to a “high degree” by 55 percent and 49 percent of respondents, respectively.

Top Mobility Challenges: Environmental Concerns and Family Resistance

  • Environmental concerns are the most frequently cited significant challenge to moving expatriates into China (indicated by 56 percent for long-term assignments, 52 percent for permanent moves and 44 percent for short-term assignments), while “family resistance to moving” ranks as the most frequently cited significant challenge to moving Chinese nationals within China (cited by 48 percent for long-term assignments and 54 percent for permanent moves).

“Companies need agile, skilled workforces to respond to rapidly changing opportunities and fulfill their strategic goals.  As the Chinese economy transitions from one driven by export growth to one of internal innovation, the required skill sets are changing.  Businesses are meeting new demands with a balance of flexible assignee programs and a greater focus on developing local talent,” says Peggy Smith, SCRP, SGMS-T, President and CEO of Worldwide ERC®.  “Our survey findings support that this combined approach is helping organizations fill critical talent needs and skills gaps.”

Conducted in January 2016, this survey includes data from 163 companies representing 24 industries. Complete survey results are available on a complimentary basis to corporate human resource and government agency members of Worldwide ERC®.  Please visit www.Worldwideerc.org/Research for more information.

Be sure to follow us on twitter: @reloamericaintl and like us on facebook: facebook.com/reloamerica