Tag Archives: michigan relocation

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

Relocation Trends

Atlas Van Lines recently released their ‘2011 Migration Trends’ reports.  According to this new report, Southwestern and Mid-Atlantic states were popular destinations in 2011.  Historical data suggests this trend in relocation is likely related to retirement and weather preferences. Retirees are attracted to states with temperate climates, affordable costs of living, good health care and pretty scenery.

The Midwest continued to lose residents in 2011, but the data shows Michigan became a balanced state after six consecutive years of steady outbound moves (yeah).  Continue reading

Temporary Housing Outlook

According to Minna Sharrak of Leading Apartments, 2011 was an interesting year for the temporary housing industry in Michigan.  With corporate relocations on the rise and the Michigan Film Incentive bringing productions from out of state, temporary housing was very much in demand.

The increased demand coupled with a surge in foreclosures brought a severe shortage of quality temporary housing in 2011. There has not been much in the way of new apartment construction in the past 10 years due to the fluctuations in the economy. Apartment complexes that were newer were always running at 99% occupancy.  The low vacancy rate translated into less well maintained complexes being presented to incoming transferees as their only temporary housing option. Continue reading