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Dispelling 5 Common Myths of U.S. Domestic Relocation

WHR Group Employee Relocation
WHR Group Employee Relocation

Relocation companies do not profit from buying and selling employees' homes. They provide a market-based offer that is an average of independent appraisals. Payments to vendors on behalf of employees are non-taxable if for household goods moves, final destination move costs, or qualified home sale programs. While other relocation expenses use the 50-mile test for tax protection, home sales do not and are sometimes taxable. Short-term assignments under 1 year are treated as business trips for tax purposes, but assignments required beyond 365 days include taxable travel reimbursements after that point. Relocation company service fees of 3-5% of relocation spending can greatly reduce costs for organizations while ensuring tax compliance and program structure

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U.S. Domestic Relocation Dispelling 5 Common Myths WHR Group
RELOCATION COMPANIES MAKE MONEY BUYING AND SELLING HOUSES 1.
Relocation companies provide a market-based offer for an employees home based on the appraisal criteria set forth by the Worldwide ERC. Relocation home sale expertise Priced to sell IRS compliant
Typically, two appraisals are ordered from independent appraisers, and the results are averaged for an offer on the employees home. $208,000 $203,000 /2 $205,500 buyout + =
Relocation companies do not make a profit on buying and selling the home but rather are paid a fee for services regardless of the propertys eventual sales price.
IF A RELOCATION COMPANY MAKES PAYMENTS TO VENDORS, ITS NOT A TAXABLE REIMBURSEMENT TO THE EMPLOYEE 2.
All payments made on behalf of an employee to a vendor can be considered taxable income to the employee.
Exceptions to this are... Household goods move costs Final move costs to the destination Any costs associated with a qualified Home Sale program
HOME SALES ARE TAXABLE IF THEY DONT MEET THE IRS 50 MILE TEST 3.
Home sales fall under a different IRS tax ruling than other relocation expenses (specifically Revenue Ruling 72-339)
While these other relocation expenses use the 50-mile test to determine tax protection, the test does not apply to home sale programs [Organizations can handle home sales like any other business expense]
SHORT-TERM ASSIGNMENTS LASTING LONGER THAN 365 DAYS DO NOT NEED BENEFITS TAXED UNTIL DAY 366 4.
Short-term assignments less than one year are treated like any other business trip.
HOWEVER Once an assignment is required beyond 365 days in duration, travel reimbursements are taxable.
RELOCATION COMPANIES SERVICE PROVIDER FEES CAN VASTLY REDUCE AN ORGANIZATIONS RELOCATION SPEND 5.
Provider fees typically account for only 3 - 5% of relocation spend (While a small amount in comparison to total cost, these fees can reap great rewards in cost savings, program structure, and ensuring tax compliance.)
WHR Group helps transferring employees by making moves simple, smooth, and enjoyable. www.whrg.com/news for more!

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Dispelling 5 Common Myths of U.S. Domestic Relocation

  • 1. U.S. Domestic Relocation Dispelling 5 Common Myths WHR Group
  • 2. RELOCATION COMPANIES MAKE MONEY BUYING AND SELLING HOUSES 1.
  • 3. Relocation companies provide a market-based offer for an employees home based on the appraisal criteria set forth by the Worldwide ERC. Relocation home sale expertise Priced to sell IRS compliant
  • 4. Typically, two appraisals are ordered from independent appraisers, and the results are averaged for an offer on the employees home. $208,000 $203,000 /2 $205,500 buyout + =
  • 5. Relocation companies do not make a profit on buying and selling the home but rather are paid a fee for services regardless of the propertys eventual sales price.
  • 6. IF A RELOCATION COMPANY MAKES PAYMENTS TO VENDORS, ITS NOT A TAXABLE REIMBURSEMENT TO THE EMPLOYEE 2.
  • 7. All payments made on behalf of an employee to a vendor can be considered taxable income to the employee.
  • 8. Exceptions to this are... Household goods move costs Final move costs to the destination Any costs associated with a qualified Home Sale program
  • 9. HOME SALES ARE TAXABLE IF THEY DONT MEET THE IRS 50 MILE TEST 3.
  • 10. Home sales fall under a different IRS tax ruling than other relocation expenses (specifically Revenue Ruling 72-339)
  • 11. While these other relocation expenses use the 50-mile test to determine tax protection, the test does not apply to home sale programs [Organizations can handle home sales like any other business expense]
  • 12. SHORT-TERM ASSIGNMENTS LASTING LONGER THAN 365 DAYS DO NOT NEED BENEFITS TAXED UNTIL DAY 366 4.
  • 13. Short-term assignments less than one year are treated like any other business trip.
  • 14. HOWEVER Once an assignment is required beyond 365 days in duration, travel reimbursements are taxable.
  • 15. RELOCATION COMPANIES SERVICE PROVIDER FEES CAN VASTLY REDUCE AN ORGANIZATIONS RELOCATION SPEND 5.
  • 16. Provider fees typically account for only 3 - 5% of relocation spend (While a small amount in comparison to total cost, these fees can reap great rewards in cost savings, program structure, and ensuring tax compliance.)
  • 17. WHR Group helps transferring employees by making moves simple, smooth, and enjoyable. www.whrg.com/news for more!