The Basics of Relocation Taxes

Released Date: 1/15/2007

Recruiters are responsible for negotiating candidate’s salaries and comp packages, and it is important to not overlook the tax ramifications of relocation dollars.  Recruiter Relo is not a CPA firm, nor do we provide detailed tax counseling, but we have the experience and knowledge to get you started and point you in the right direction.

According to the IRS, “with the exception of the shipment of household goods and final trip to the new destination, any relocation expenses that a company reimburses or pays for on behalf of an employee must be included in the employee’s gross income and is subject to withholding and employment taxes.”  This includes any relocation dollars to help with selling a home, buying a home, temporary living expenses, loss on home sale, house hunting trips, and anything else other than shipment of the household goods and family.

Many companies will make an additional payment, called a “gross up” to help offset this tax liability, but that gross up must also be reported as income and also produces it’s own tax liability.

Therefore, it is important to find out exactly how the company plans on administering the relocation package for a candidate. Recruiter Relo will utilize our contracts to help your candidate make the most of their relocation dollars

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The Basics of Relocation Taxes