“What is carrier valuation?” Carrier valuation is a declaration by the transferring employee (person being moved) of the maximum amount of the carrier’s liability in the event of a transit-related loss or damage of their household goods.
Valuation is not insurance. In other words, valuation provides a certain level of protection for loss or damage caused by a carrier while the shipment is in the care, custody, and control of the carrier. The amount of coverage is predetermined prior to the move and may not be sufficient in the event of a loss.
WHAT DOES IT COVER?
When you move, your personal property is loaded onto a moving truck. While most moves go smoothly, accidents do happen and some items may be lost or damaged during shipment. Prior to the move a carrier representative will discuss with the transferring employee the amount of liability the carrier is responsible for in the event of loss or damage. At the time of the move a descriptive inventory list will be developed by the carrier and the transferring client. This list includes the count and condition of the shipped items when they come into the care, custody, and control of the carrier. At times the client may have certain items that carry a higher value than normal such as artwork, jewelry, collectibles etc….
It is our recommendation that items of high value such as jewelry, coins, and collectables be moved personally by the transferring employee. If they are is unable or unwilling to do this, then these items must be recorded and reported on a special form called the high value inventory form. The determination of the value of the transferring employee’s entire shipment is a very important part of the moving process and is pre-determined by the transferring employee prior to the move.
What is tax gross up? A tax gross up means the company has increased an employee’s pay, bonus, or any other taxable income so the employee doesn’t actually pay his/her own (estimated) tax. If they are told they are getting a million dollar bonus, the tax gross up means they actually get a check for $1 million after taxes. As most relocation costs are considered income to the transferee and subject to tax, tax gross up has the potential to greatly increase a corporation’s relocation cost.
Tax gross up is a legal business practice. If it is not done correctly, it can result in an audit and can bring adverse affects on your transferring employee and your corporation. An incorrectly filed tax gross up could mean employees might have to file a tax extension. In some cases, they might need to file an amended tax return owing to wrong W-2 statements. It’s advisable to hire services from a third party relocation management company that offers gross up tax assistance.
Gross-up/tax assistance on taxable relocation expenses is not required by the IRS; gross-up is a benefit that a company chooses to give to transferees who qualify. Most relocation policies offer some sort of tax assistance to transferees so their out-of-pocket tax costs due to the relocation are eliminated or reduced. One thing to keep in mind is that the gross-up payment itself also is taxable to the employee and subject to withholding and payroll tax. Therefore, to fully tax protect the employee, the gross-up must itself be “grossed up,” and the gross-up of the gross-up must be grossed up, and so on.
There are a few different methods used to calculate the gross up (inverse method, true up and simple method) and depending on how a company calculates the gross up, an employee may still end up owing money at tax time. Below is a comprehensive explanation of how each method applies to income. Managements generally maintain that the tax gross-up is a valuable tool for hiring and retaining talented executives. It is generally accepted within the relocation industry that transferees should not have to absorb the stress of relocation and suffer financially as well.
Relocation America International would like to wish all of our clients, transferees and employees a happy and safe thanksgiving!
Check out this great info graphic on the history of Thanksgiving and how it compares to today’s Thanksgiving traditions!
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