Presented by Presented by David S. Oltman, CRP David S. Oltman, CRP

Ineo/Relocation Taxes, LLC Ineo/Relocation Taxes, LLC www.relotax.com

Presented by Presented by David S. Oltman, CRP David S. Oltman, CRP

Ineo/Relocation Taxes, LLC Ineo/Relocation Taxes, LLC www.relotax.com

New New 2012 Tax Law Changes – 2012 Tax Law Changes – Their Impact on Relocation Tax Their Impact on Relocation Tax

Gross-up Policies and the Gross-up Policies and the TransfereeTransferee

NERANERA2/9/122/9/12

New 2012 Corporate Tax & New 2012 Corporate Tax & Payroll Payroll IssuesIssues

• Tax Credits lost on tax returns – Education Credits and American Tax Credits lost on tax returns – Education Credits and American Opportunity Credits – IRS Form 8863 (Phase-out range “Single” $80,000 - Opportunity Credits – IRS Form 8863 (Phase-out range “Single” $80,000 - $90,000 and “Married Filing Joint” $160,000 to $180,000), Child Tax $90,000 and “Married Filing Joint” $160,000 to $180,000), Child Tax Credits ($110,000, $130,000, $150,000…). Credits ($110,000, $130,000, $150,000…). See RTA p. 11See RTA p. 11. Repayment of . Repayment of Home Buyer Tax Credit – IRS Form 5405 if moved again within 3 years. Home Buyer Tax Credit – IRS Form 5405 if moved again within 3 years. All these issues can effect the transferred employee by several hundred All these issues can effect the transferred employee by several hundred dollars, to several thousand dollars, to well over $10,000+. dollars, to several thousand dollars, to well over $10,000+. See RTA p. 44.See RTA p. 44.

RecommendationRecommendation: Only after doing a complete gross-up audit in 2012 of : Only after doing a complete gross-up audit in 2012 of the employee’s 2011 tax return. Cost usually between $250 to $395 per the employee’s 2011 tax return. Cost usually between $250 to $395 per audit.* The importance of proper tax preparation can not be over stated. audit.* The importance of proper tax preparation can not be over stated. For example a FL to OH move – and not allocating state wages properly.For example a FL to OH move – and not allocating state wages properly.

**Business ExpenseBusiness Expense. . Not taxableNot taxable..

New 2012 Corporate Tax and New 2012 Corporate Tax and Payroll Payroll Issues Issues1)1) AMT Tax (AMT Tax (AAlternative lternative MMinimum inimum TTax) effects – could effect 10 times more taxpayers, ax) effects – could effect 10 times more taxpayers,

“Target” result is the corporate transferee. (higher gross-ups). “Target” result is the corporate transferee. (higher gross-ups). See RTA p.10 & page 44See RTA p.10 & page 44

2) 2) All Tax Brackets where indexed for inflation (significant lower gross-ups in 2012 could All Tax Brackets where indexed for inflation (significant lower gross-ups in 2012 could be higher in 2013) See RTA p.11. be higher in 2013) See RTA p.11. Brand newBrand new – lower phase-outs of itemized – lower phase-outs of itemized deductions (went from 3% to 2% to 1% to 0% in 2010 and 2011 - and lower phase-deductions (went from 3% to 2% to 1% to 0% in 2010 and 2011 - and lower phase-out for personal exemption amounts 1/3 reduction and a new minimum of $2,333 out for personal exemption amounts 1/3 reduction and a new minimum of $2,333 ($3,700 x. 66.67%) per personal exception. 0% in 2010 and 2011. ($3,700 x. 66.67%) per personal exception. 0% in 2010 and 2011. Average Average savings of $375/move. savings of $375/move.

Potential 2013 higher tax rates – gross-up impact. 60% total tax rate = a Potential 2013 higher tax rates – gross-up impact. 60% total tax rate = a 150% gross-up.150% gross-up.

3) 3) How states are catching employees who do not report their wages. Tax Amnesty. How states are catching employees who do not report their wages. Tax Amnesty. Hotel & credit card gas receipts. Hotel & credit card gas receipts. IRS Employment Tax Audits BeginIRS Employment Tax Audits Begin in 2010 and in 2010 and will run through 2013will run through 2013. A significant number of audits have been started.. A significant number of audits have been started.

5) 5) New State Sales Tax Deduction – Applies mainly to transferees in nine (9) no income New State Sales Tax Deduction – Applies mainly to transferees in nine (9) no income tax states. AK, FL, NV, NH, SD, TN, TX, WA & WY (lower gross-ups) See RTA p.12 tax states. AK, FL, NV, NH, SD, TN, TX, WA & WY (lower gross-ups) See RTA p.12 Average savings of $600 per moveAverage savings of $600 per move

6) 6) Reduced Home Sale Exclusion & New Home Buyer Tax Credit ($8,000/$6,500). Very Reduced Home Sale Exclusion & New Home Buyer Tax Credit ($8,000/$6,500). Very Complex. See RTA – p.44 IRS Form 5405 – plus new “Repayment Letter” being sent Complex. See RTA – p.44 IRS Form 5405 – plus new “Repayment Letter” being sent by IRS based on address changes. If house turned into rental – credit must be by IRS based on address changes. If house turned into rental – credit must be repaid.repaid.

7)7) New HUD-1 Form – Special attention should be given to line 801 – New HUD-1 Form – Special attention should be given to line 801 – See RTA page 36See RTA page 36..

2012 Hot Federal/State Tax Issues2012 Hot Federal/State Tax Issues • Temporary Assignments – 1 year rule – business vs. taxable. See Temporary Assignments – 1 year rule – business vs. taxable. See

RTA pages 8 & 9 also Revenue Ruling 93-86. New Trend to RTA pages 8 & 9 also Revenue Ruling 93-86. New Trend to “reconcile” state taxes – “Keep Employee Whole For State “reconcile” state taxes – “Keep Employee Whole For State Income Tax ”. New Proposed Tax Bill – H.R. 1864 – “30 Day Rule” Income Tax ”. New Proposed Tax Bill – H.R. 1864 – “30 Day Rule” (was H.R. 3359 & 2110 - 60 day rule). “Mobile Workforce State (was H.R. 3359 & 2110 - 60 day rule). “Mobile Workforce State Income Tax Fairness and Simplification Act”. The methodology Income Tax Fairness and Simplification Act”. The methodology used is to calculate what the employee “would have paid” in used is to calculate what the employee “would have paid” in Federal and State/Local taxes (in the “live state”) – then Federal and State/Local taxes (in the “live state”) – then compare that amount to what the employee “actually paid” in compare that amount to what the employee “actually paid” in Federal and State/Local taxes (in the temp. “work state”). The Federal and State/Local taxes (in the temp. “work state”). The difference between those two amounts is the amount due the difference between those two amounts is the amount due the employee. Issues to consider: employee. Issues to consider:

– a)    Any State income tax dollars that were “advanced” or “loaned”a)    Any State income tax dollars that were “advanced” or “loaned”– b)    The taxability of “advances” or “loans”b)    The taxability of “advances” or “loans”– c)    Multi-state tax credits taken or not taken on state tax returnsc)    Multi-state tax credits taken or not taken on state tax returns– d)    Non-Resident and Part-Year Resident state tax returnsd)    Non-Resident and Part-Year Resident state tax returns– e)    Administration of the program – “loans”, “advances” and e)    Administration of the program – “loans”, “advances” and

“repayments”“repayments”

* Proposed Effective Date retroactive to 1/1/2013 – See RTA p. 13* Proposed Effective Date retroactive to 1/1/2013 – See RTA p. 13

• Global Assignments – Stealth Expatriates – tracking issues. See RTA pages 14 thru 19.Global Assignments – Stealth Expatriates – tracking issues. See RTA pages 14 thru 19.• E-Solutions – New trends – Lots of software on the market – average cost $50 - $75 per move. From Gross-ups to Int’l Hypo Taxes, to Lump Sum software.E-Solutions – New trends – Lots of software on the market – average cost $50 - $75 per move. From Gross-ups to Int’l Hypo Taxes, to Lump Sum software.• US Government (WITA/RITA) - Sen. Grassley - GRAB. US Government (WITA/RITA) - Sen. Grassley - GRAB. See RTA pages 38 & 39See RTA pages 38 & 39

• Capital Losses on home sales are NOT deductible. See RTA page 2Capital Losses on home sales are NOT deductible. See RTA page 2• The Mortgage Forgiveness Debt Relief Act. “Short Sales” no longer taxable, Negative Equities and Loss on Sales.The Mortgage Forgiveness Debt Relief Act. “Short Sales” no longer taxable, Negative Equities and Loss on Sales.• IRS Revenue Ruling 2005-74 (updates 72-339) – Corporate home sale procedures clarified. Third Party home sales NOT taxable.IRS Revenue Ruling 2005-74 (updates 72-339) – Corporate home sale procedures clarified. Third Party home sales NOT taxable.• First Time Homebuyers Credit: $8,000/$6,500 (MFJ $225,000; SNG $125,00) start of phase out range. Three year pay back period. See IRS Form 5405 Very complex. Three First Time Homebuyers Credit: $8,000/$6,500 (MFJ $225,000; SNG $125,00) start of phase out range. Three year pay back period. See IRS Form 5405 Very complex. Three

(3) year payback provision. IRS has just started sending out repayment request letters, to employees who have “changed their address” or “moved” or have “rented their (3) year payback provision. IRS has just started sending out repayment request letters, to employees who have “changed their address” or “moved” or have “rented their house”.house”.

• Commuters – Expenses & Salary taxable in both “live” and “work” states.Commuters – Expenses & Salary taxable in both “live” and “work” states.• Making Work Pay Credit: – Between $400 to $800 credit Phase out range (Single $75,000 - $95,000 and then MFJ $150,000 - $190,000) Replaced in 2012 by lower FICA - was Making Work Pay Credit: – Between $400 to $800 credit Phase out range (Single $75,000 - $95,000 and then MFJ $150,000 - $190,000) Replaced in 2012 by lower FICA - was

6.20% currently 4.20%. 6.20% currently 4.20%. • Average Gross-up Percent's – Could go from 60% to over150% based on proposed 2013 tax changes.Average Gross-up Percent's – Could go from 60% to over150% based on proposed 2013 tax changes.

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2012 Tax and Payroll Issues2012 Tax and Payroll Issues2012 Tax and Payroll Issues2012 Tax and Payroll Issues

IRS 2012 Tax Forms:IRS 2012 Tax Forms:

• RTR - "Relocation Tax Report" - replaces old "IRS Form 4782“. See RTR - "Relocation Tax Report" - replaces old "IRS Form 4782“. See RTA p. 25RTA p. 25

• 3903 - "Moving Expenses" - taxpayer required. See RTA p. 293903 - "Moving Expenses" - taxpayer required. See RTA p. 29• Sch. D - "Capital Gains and Losses" - replaces old "IRS Form 2119“Sch. D - "Capital Gains and Losses" - replaces old "IRS Form 2119“• New Form 8938 – Similar to TD F 90-21.1 – Report Foreign Bank – Similar to TD F 90-21.1 – Report Foreign Bank

Accounts and Interests, >$10k, or $50K or $100kAccounts and Interests, >$10k, or $50K or $100k• New 2011 Federal, State, Local and F.I.C.A. (Social Security – 4.20%) New 2011 Federal, State, Local and F.I.C.A. (Social Security – 4.20%)

$106,800 & Medicare 1.45% unlimited) tax brackets. The 2011 $106,800 & Medicare 1.45% unlimited) tax brackets. The 2011 FICA/Medicare brackets – have changed. The longtime OASDI rate FICA/Medicare brackets – have changed. The longtime OASDI rate for the employee of 6.20% has changed in 4.20% in 2011 and 2012. for the employee of 6.20% has changed in 4.20% in 2011 and 2012. The employer rate remains 6.20%. This represents a potential The employer rate remains 6.20%. This represents a potential several hundred dollar per move gross-up savings.several hundred dollar per move gross-up savings.

• New 2012 FICA Limit $110,100.New 2012 FICA Limit $110,100.• States that follow the pre-1994 "rules" allowing the final move meal States that follow the pre-1994 "rules" allowing the final move meal

deduction / exclusion.deduction / exclusion. NJ* / PA**NJ* / PA**

• * Allows only a 100% exclusion of Final Move Meals on NJ-* Allows only a 100% exclusion of Final Move Meals on NJ-10401040

• ** Allows a 100% deduction of Final Move Meals on PA-40R-** Allows a 100% deduction of Final Move Meals on PA-40R-UE-1UE-1

Penalties for Failure to Withhold taxes Penalties for Failure to Withhold taxes on a on a timely basis.timely basis.

• Most all relocation expense reimbursements or Most all relocation expense reimbursements or supplemental wage payments are subject to supplemental wage payments are subject to withholding withholding at the time of paymentat the time of payment. Most . Most companies use the Supplemental rate of 25% and companies use the Supplemental rate of 25% and apply a gross-up percentage. Accountable Plan apply a gross-up percentage. Accountable Plan rules apply, using the 30/60/120 rule. Taxable rules apply, using the 30/60/120 rule. Taxable moving expenses (lump sums) are treated as if moving expenses (lump sums) are treated as if they were paid under a "non-accountable" plan. they were paid under a "non-accountable" plan. An average penalty of $8,000 per move could cost An average penalty of $8,000 per move could cost a company that relocates 200 employees per year, a company that relocates 200 employees per year, 1.6 million dollars for each year of non-compliance.1.6 million dollars for each year of non-compliance.

Tax Saving Strategies (Withhold/Gross-Tax Saving Strategies (Withhold/Gross-up)up)

(1) When ever possible, always look for a business purpose for an (1) When ever possible, always look for a business purpose for an expense. For example, Moves less than 1 year (temporary expense. For example, Moves less than 1 year (temporary assignments), a Pre-employment physical, House Hunting Trips as assignments), a Pre-employment physical, House Hunting Trips as business trips (breakout spouse expenses). Use a TP Home Sale business trips (breakout spouse expenses). Use a TP Home Sale Company or Qualified In-House Program. Company or Qualified In-House Program. Tax Gross-up Savings over Tax Gross-up Savings over $9,000 per move.$9,000 per move.

(2) Have trained accounting/relocation tax expense professionals tax (2) Have trained accounting/relocation tax expense professionals tax code and audit all expenses entered from the transferee's expense code and audit all expenses entered from the transferee's expense report. report. Average cost is $300 to $500 per moveAverage cost is $300 to $500 per move

(3) Do not include either Van Line or Final Move expenses in a "Lump-(3) Do not include either Van Line or Final Move expenses in a "Lump-Sum" allowance. Why? Because not taxable when receipts are provided. Sum" allowance. Why? Because not taxable when receipts are provided. Employees can still deduct their moving expenses even if they receive a Employees can still deduct their moving expenses even if they receive a lump sum that is taxable and grossed-up. lump sum that is taxable and grossed-up. Lumps Sum Software $50 to Lumps Sum Software $50 to $75 per move$75 per move. .

(4) Re-capture any FICA overpayments – Year-end “true-up” – only adjust (4) Re-capture any FICA overpayments – Year-end “true-up” – only adjust for “negatives” differences. for “negatives” differences. Tax Gross-up Savings over $1,000+ per Tax Gross-up Savings over $1,000+ per move.move.

(5) Explain/Educate employees with regard to how their gross-up was (5) Explain/Educate employees with regard to how their gross-up was calculated. calculated. Priceless!!!!!Priceless!!!!!

• Year-end “true-up” or “difference” or “delta” calculation. Year-end “true-up” or “difference” or “delta” calculation. Negatives only “adjustments”. Big savings in gross-ups Negatives only “adjustments”. Big savings in gross-ups Average gross-up is over $10,000. Average gross-up is over $10,000. (Average savings over (Average savings over $2,000 per move).$2,000 per move).

• Only gross-up at supplemental rate [ 25% ], let transferees Only gross-up at supplemental rate [ 25% ], let transferees come back and request more. Gross-up Audit after the fact. come back and request more. Gross-up Audit after the fact. (Average savings over $1,000 per move).(Average savings over $1,000 per move).

• Companies no longer automatically grossing-up for FICA Companies no longer automatically grossing-up for FICA (4.20% + 1.45%) $110,100 maximum. (4.20% + 1.45%) $110,100 maximum.

• Lump Sums – Becoming very popular, software is available. Lump Sums – Becoming very popular, software is available. $50 - $75$50 - $75

• Expense Management Audits – Relocation Accounting Audits. Expense Management Audits – Relocation Accounting Audits. (Average costs $395 per audit or several thousand (Average costs $395 per audit or several thousand dollars to audit a “batch” of records).dollars to audit a “batch” of records).

• ReconcileReconcile State Taxes for employees who go on a temporary State Taxes for employees who go on a temporary assignment or Commuter assignments. Gross-up wages for assignment or Commuter assignments. Gross-up wages for extra state taxes when needed. extra state taxes when needed. Gross-up Audits – for AMT, Gross-up Audits – for AMT, Home Buyer Credit and Other Lost Credits. Home Buyer Credit and Other Lost Credits. Cost $395 per moveCost $395 per move . .

Hot 2012 Relocation TrendsHot 2012 Relocation Trends

1) Income will be inflated due to moving expenses paid by your company. 1) Income will be inflated due to moving expenses paid by your company. Make sure that federal and state withholdings are sufficient to cover the Make sure that federal and state withholdings are sufficient to cover the increase. Also, the year after the move, most transferees are more likely to increase. Also, the year after the move, most transferees are more likely to be under withheld. If in doubt, contact your tax advisor. See RTA p.7 Also, be under withheld. If in doubt, contact your tax advisor. See RTA p.7 Also, If your company paid your Van Line bill, you can If your company paid your Van Line bill, you can NOT NOT deduct it on IRS Form deduct it on IRS Form 3903. If you rent out your house, you will have to repay the Home Buyer 3903. If you rent out your house, you will have to repay the Home Buyer Tax Credit.Tax Credit.

2) Make sure that a state W-4 form has been prepared and given to your 2) Make sure that a state W-4 form has been prepared and given to your payroll department so that withholding is being taken out in the proper payroll department so that withholding is being taken out in the proper state. YOU ARE REQUIRED TO HAVE WITHHOLDING TAKEN IN THE STATE state. YOU ARE REQUIRED TO HAVE WITHHOLDING TAKEN IN THE STATE THAT YOU WORK IN, EVEN IF YOU ARE A RESIDENT OF ANOTHER STATE! THAT YOU WORK IN, EVEN IF YOU ARE A RESIDENT OF ANOTHER STATE! This should become effective the first paycheck received in the new place This should become effective the first paycheck received in the new place of employment. See RTA p.7, 12 and 13of employment. See RTA p.7, 12 and 13

3) In addition to the state, your new city may also require tax to be withheld. 3) In addition to the state, your new city may also require tax to be withheld. Review your first pay stub to make sure that this is being done (if Review your first pay stub to make sure that this is being done (if applicable).applicable).

4) Keep in mind that excess FICA withheld from two or more employers is 4) Keep in mind that excess FICA withheld from two or more employers is refundable, Line 69 IRS tax form 1040. Affects both working spouses.refundable, Line 69 IRS tax form 1040. Affects both working spouses.

5) You have up to two years to satisfy the time test, to establish permanent 5) You have up to two years to satisfy the time test, to establish permanent residency, in order to deduct moving expenses.residency, in order to deduct moving expenses.

10 Things Every Employee Should 10 Things Every Employee Should Know Know BeforeBefore Considering a Considering a MoveMove

10 Things Every Employee Should 10 Things Every Employee Should Know Know BeforeBefore Considering a Considering a MoveMove

6) Special costs, that are unique to you, are also deductible as moving 6) Special costs, that are unique to you, are also deductible as moving expenses such as pets, horses, aquariums and tips paid to “movers expenses such as pets, horses, aquariums and tips paid to “movers & packers. No limit on the number of cars that can be moved and & packers. No limit on the number of cars that can be moved and deducted. deducted. See RTA p.4See RTA p.4

7) The cost of moving students, from their college to the new location, 7) The cost of moving students, from their college to the new location, is deductible.is deductible.

8) In the year that you move, remember that any non-amortized 8) In the year that you move, remember that any non-amortized points on a refinanced loan can be deducted if you sell your house. points on a refinanced loan can be deducted if you sell your house. See RTA p.8See RTA p.8

9) Premature distributions from pension plans are not only taxable as 9) Premature distributions from pension plans are not only taxable as income but incur a 10% penalty unless rolled over within 60 days. income but incur a 10% penalty unless rolled over within 60 days. There is often a misconception how the rules for first time There is often a misconception how the rules for first time homebuyers work. Also in the year of a move, income is inflated homebuyers work. Also in the year of a move, income is inflated and this is probably and this is probably not a good timenot a good time to take an early distribution. to take an early distribution.

10) The year after the move, significant potential for under 10) The year after the move, significant potential for under withholding penalties exist. It could be hard to meet any of the safe withholding penalties exist. It could be hard to meet any of the safe harbor rules: Owe<$1,000, or pay at least 100% of last year’s harbor rules: Owe<$1,000, or pay at least 100% of last year’s liability, if AGI is >$150k, then pay 110% of last years liability. liability, if AGI is >$150k, then pay 110% of last years liability. See See RTA p.7RTA p.7

10 Things Every Employee Should 10 Things Every Employee Should Know Know

BBeforeefore Considering a MoveConsidering a Move

10 Things Every Employee Should 10 Things Every Employee Should Know Know

BBeforeefore Considering a MoveConsidering a Move

Gross-up Audits Gross-up Audits “With/Without Move Analysis”“With/Without Move Analysis”

Common mistakes CPAs make with Common mistakes CPAs make with transferees' tax returns with regard to transferees' tax returns with regard to “Keeping The Transferee Whole"“Keeping The Transferee Whole"

(1)(1)The tax return is prepared incorrectly!!!. Excludables (W-2 Box 12 The tax return is prepared incorrectly!!!. Excludables (W-2 Box 12 – Items preceded by the letter “P”) are not properly reported and – Items preceded by the letter “P”) are not properly reported and carried forward to the 1040 Federal tax return. IRS Form 3903 carried forward to the 1040 Federal tax return. IRS Form 3903 “Moving Expenses” is not completed properly, or not at all. “Moving Expenses” is not completed properly, or not at all. Points / Loan Origination fees are not deducted properly on IRS Points / Loan Origination fees are not deducted properly on IRS Schedule A. Part year and non-resident State Tax Returns are not Schedule A. Part year and non-resident State Tax Returns are not completed properly, or not at all. completed properly, or not at all.

(2)(2)Accountant is not familiar with the company's relocation tax gross-Accountant is not familiar with the company's relocation tax gross-up policy. For example, what expenses are Grossed-up and which up policy. For example, what expenses are Grossed-up and which expenses are not subject to tax assistance.expenses are not subject to tax assistance.

(3)(3)Other income (spouse income) is used to establish tax brackets Other income (spouse income) is used to establish tax brackets both "with" and "without" the move.both "with" and "without" the move.

(4)(4)Points are deducted both "with" and "without" move.Points are deducted both "with" and "without" move.

(5) State and Local Gross-up tax dollars are deducted (5) State and Local Gross-up tax dollars are deducted "with" and "without" the move."with" and "without" the move.

(6) Recapture Excess FICA taxes Withheld.(6) Recapture Excess FICA taxes Withheld.Comment: If the transferee "partially loses the benefit of their Comment: If the transferee "partially loses the benefit of their

Standard Deduction", or the new “General Sales Tax Deduction”; Standard Deduction", or the new “General Sales Tax Deduction”; in other words, is forced to itemize; the transferee has been in other words, is forced to itemize; the transferee has been adversely affected.adversely affected.

For example, the maximum "Standard Deduction Loss" For example, the maximum "Standard Deduction Loss" exposure:exposure:

Standard Deduction Married Filing JointlyStandard Deduction Married Filing Jointly$11,900 (MFJ)$11,900 (MFJ) .25%.25%$ 2,975 $ 2,975 "Extra Tax Owed Because of Move""Extra Tax Owed Because of Move"

  Additionally, transferee’s who exercise stock options, have rental Additionally, transferee’s who exercise stock options, have rental propertiesproperties, AMT and generally more complex tax issues should consider , AMT and generally more complex tax issues should consider having “professional” tax preparation and review” by trained relocation having “professional” tax preparation and review” by trained relocation tax experts.tax experts.

Gross-up Audits – With/Without Move Gross-up Audits – With/Without Move AnalysisAnalysisGross-up Audits – With/Without Move Gross-up Audits – With/Without Move AnalysisAnalysis

• 2012 GROSS-UP DECISIONS2012 GROSS-UP DECISIONS YES/NOYES/NO Additional Cost Per Additional Cost Per Move*Move*

• Use Tax TablesUse Tax Tables _____ _____ Several Thousand DollarsSeveral Thousand Dollars

• State TaxesState Taxes __________ Moved To / From / Both ? Moved To / From / Both ? $1,000$1,000

• Include Fed. in StateInclude Fed. in State __________ $350$350  • Local TaxesLocal Taxes __________ $150$150  • F.I.C.A. Taxes F.I.C.A. Taxes __________ SS / Med / Both SS $1,000 / SS / Med / Both SS $1,000 /

MedicareMedicare $250$250

• F.I.C.A. Circular LogicF.I.C.A. Circular Logic __________ $400$400

Money Saving Gross-up Policy Money Saving Gross-up Policy Administrative Opportunities Administrative OpportunitiesMoney Saving Gross-up Policy Money Saving Gross-up Policy Administrative Opportunities Administrative Opportunities

Money Saving Gross-up Policy Money Saving Gross-up Policy

Administrative Opportunities Administrative Opportunities– 2012 GROSS-UP DECISIONS2012 GROSS-UP DECISIONS YES/NOYES/NO Additional Cost Per Additional Cost Per

Move*Move*

– Deduction/Exempt. Phase-outDeduction/Exempt. Phase-out ________ $275 (No 2012 phase-out)$275 (No 2012 phase-out)

– Assume Itemized Deductions Assume Itemized Deductions ________ $600 (New GST)$600 (New GST)

– Gross-up "Unqualified" MovesGross-up "Unqualified" Moves ________ $5,800$5,800

– Misc. Expense AllowanceMisc. Expense Allowance ________ $4,000$4,000

– COLA / MIDACOLA / MIDA ________ $6,000$6,000

– $0.555/$0.23 cents per mile$0.555/$0.23 cents per mile ________ $150$150

– Loss on SaleLoss on Sale ________ $10,000 to $50,000+$10,000 to $50,000+

– AMT, WPC, First Time HB CreditsAMT, WPC, First Time HB Credits ________ $1,000 - $20,000+$1,000 - $20,000+

– Annualize New Hire SalariesAnnualize New Hire Salaries ____ ____ Several Thousand Several Thousand DollarsDollars

Money Saving Gross-up Policy Money Saving Gross-up Policy

Administrative Opportunities Administrative Opportunities2012 GROSS-UP DECISIONS2012 GROSS-UP DECISIONS YES/NOYES/NO Additional Cost Per Additional Cost Per Move*Move*

• Look at Non-itemizers (Renters)Look at Non-itemizers (Renters) ________ $500+$500+

• Economic Stimulus PackageEconomic Stimulus Package ________ $0 to $2,000+$0 to $2,000+  • Third Party Home Sale CompanyThird Party Home Sale Company ________ $9,000$9,000  • OtherOther ________ 58% to 60% of 58% to 60% of

Benefit Paid - CommutersBenefit Paid - Commuters

• The dollar amounts presented are estimates only. The actual dollar The dollar amounts presented are estimates only. The actual dollar amount will vary based on the total cost of the move, what state is used amount will vary based on the total cost of the move, what state is used for tax purposes, and of course the company's relocation tax gross-up for tax purposes, and of course the company's relocation tax gross-up policy.policy.

* * Savings documented well over $2,000 per move.Savings documented well over $2,000 per move.  Copyright Copyright Ineo/Relocation Taxes, LLC 2012Ineo/Relocation Taxes, LLC 2012

David S. OltmanDavid S. Oltman

Chief Compliance Officer & Company Co-Chief Compliance Officer & Company Co-Founder Ineo/Relocation Taxes, LLCFounder Ineo/Relocation Taxes, LLC

372 Danbury Road372 Danbury Road

Wilton, CT 06897Wilton, CT 06897

(203) 529-3020(203) 529-3020Oltman@relotax.com – e-mail address – e-mail address

www.relotax.com

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