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Tax Reform and Transferees: What You Need to Know

Posted by CapRelo on Tue, Feb 06, 2018

Red Ring Binder with Inscription Tax Law on Background of Working Table with Office Supplies, Laptop, Reports. Toned Illustration. Business Concept on Blurred Background. 3d Render..jpegTax reforms in 2018 will have an impact on deductions and property taxes. Here is a brief summary of the primary changes. Please note that individuals should always consult their tax advisors.

Moving Expense Deduction

As of January 1, 2018, movement of household goods, storage and final move travel are taxable to transferees. With the elimination of the moving expense deduction, the "50 mile", "39 week" and "one year" rules as well as the 18 cents per mile vehicle allowance are no longer relevant. This change should be reviewed closely with your mobility management company to fully understand the impact to your organization.

Tax Rates and Withholding

The tax rates are generally lowered, which should reduce the marginal tax rate for employees. The supplemental withholding rate that is used by most companies to withhold on taxable relocation benefits and to calculate gross-up will fall from 25% to 22%. However, with the loss of moving expenses and other deductions, companies will need to manage their gross-up programs carefully, especially with the new tax rates. 

State and Local Income, Sales and Property Taxes

State and local income, sales and property taxes remain deductible, but only up to $10,000 combined. Employees moving into high-tax areas are more likely to be affected.

Mortgage Interest Deduction

The mortgage interest deduction is retained, but the maximum loan amount to be able to deduct was reduced from $1 M to $750,000. Employees moving into high-cost areas are more likely to be impacted by this new threshold for mortgage interest deductions.

Home Sale Capital Gains Exclusion

There were no changes here. Both the House and Senate had proposed changing the required ownership and use as a principal residence to five out of eight years from the current two out of five. That would have certainly impacted relocation with many transfer­ees moving again inside of a five-year window, but fortunately there were no changes regarding Capital Gains on homes.

Tax Brackets and Rates, 2018

2018 Tax Brackets.png


Today's post is brought to you by our friends at Colonial National Mortgage. Click here to download a copy.

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Although this written communication may address tax issues, it is not a covered opinion as described in Circular 230.  Therefore, to ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments), unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein.

Topics: tax impact of relocation, relocation taxes, mobility and taxes

Maternity and Paternity Leave Laws Around the World [2017]

Posted by CapRelo on Wed, Nov 29, 2017

Having a baby and welcoming that new life to the world is a joy for parents. But being able to step away from work to care for the baby can vary significantly depending on your job and where you live. Being that CapRelo is a global mobility company that helps companies and individuals relocate throughout the world, we wanted to take a look at the family leave laws on a global scale.

We felt this was particularly an important subject to cover as this impacts many families involved in the relocation process. Not only do these families have to adjust to their new surroundings, but they also have to adapt to new laws regarding maternity, paternity, and paternal leave, if applicable. For this study, we focused on the family leave laws in the 25 countries with the highest GDP as well as the members of the European Union in order to get a variety of countries throughout the globe. Information was taken from government websites, an ILO report, and

Countries with the best family leave

Consider yourself lucky if you’re in the following countries that provide generous maternity policies: Australia, Poland, Bulgaria, and Sweden. For dads, paternity laws in these countries were some of the best in the world: Finland, Slovenia, Lithuania, Sweden, and Brazil.

Swedish parents are lucky in that they are entitled to 480 days of paid parental leave when a child is born until the age of 8. During 390 days out of 480, they are entitled to 80 percent of their regular wages, and the remainder at a flat rate. Fathers in the Netherlands actively participate in “Papadag” (daddy day), which is a day off of their workweek during paternity leave to spend taking care of their children. The driving force behind this is to promote a better work-life balance and equality in parenthood.

In regards to pay, we were pleased to find that the majority of countries pay 100 percent (or close to) of the wages to the mother and father during their leave.

Countries lacking in family leave

Interestingly, many countries do not have laws that give significant leave time for mothers or fathers. This can be a difficult reality for parents. The United States, for instance, has one of the worst policies in that there is no mandated leave for mothers and fathers. With that being said, maternity and paternity leave is up to the employer's discretion which can be a positive or a negative.

One pattern that was fairly consistent was the lack of leave time for fathers. Paternity leave is almost always lower than maternity leave, but it was surprising to see how little some fathers actually get. According to our research, the following countries have no mandated paternity leave in place for fathers: Japan, Germany, India, Russia, Switzerland, Croatia, Czech Republic, Austria, Ireland, Malta, Cyprus, and Slovakia. Some countries, such as Mexico, Saudi Arabia, Taiwan, Korea, and Indonesia, have below-average maternity leave laws.  


Overall, the statistics we found show that family leave laws can vary significantly throughout the world. It’s no secret that this is a passionate and important subject regardless of the country someone lives in. Mothers are almost always allowed longer leaves, but paternity leave has been growing in recent years. Even if you have little control over your next country of residence, it’s vital to understand these policies and take them into consideration. However, no matter the family leave laws, a new baby is a wonderful (if maybe stressful) thing for new parents.

Relocating Employees with Families


Topics: human resources, employee engagement, employee benefits

12 Key Points in an Employee Transfer Letter

Posted by CapRelo on Fri, Sep 15, 2017

Employee Transfer Paperwork

Employee transfer letters are given to employees who are being transferred to a different branch, department or location of their employer. The reasons for the letters is more than just common professional courtesy. Transfer letters provide employee and employer the "ground rules" of the transfer.

Learn more about how to write an employee transfer letter with our free article.

Foundation for Transfer Letters

The purpose and reasons for issuing transfer letters is central to successful employee relocations. Among the motivation and goals of these documents are the following: 

  • Create a written record of the employee's transfer for the personnel file.
  • Provide evidence that the employee's compensation account follows the employee accurately.
  • Track the personnel in each department to ensure a correct head count for staffing purposes.

Whether the transfer is employer-generated or a mutual agreement between employer and employee, the transfer letter offers visible, physical evidence of the move from one department or location to another

Transfer Letter Checklist

Consider the following items as a template from which to create appropriate transfer letters.

  1. The employee's full name and current address, with accurate contact information.
  2. Identify the reason for the transfer
  3. Name of the department or location from which the employee is transferring.
  4. Name of the department or location to which the individual is moving.
  5. The exact effective date the transfer will take place
  6. State the official start date in the new location, if the date is different from the effective date of the transfer
  7. The name of the supervisor in the new department to whom the transferee will report.
  8. The creation or issue date of the transfer letter.
  9. Note the details of the position in the new location, including any bonuses the employee is to receive as a result of the transfer.
  10. Use a standard letter or memo format, whichever is consistent with previous transfer letters issued by the employer.
  11. Closely proofread the letter to ensure accuracy.
  12. Ensure the letter or memo has the original signature of the appropriate person authorizing the transfer.

If there is a change in title or responsibilities, details about those changes may be described. Additionally, changes in titles and duties should be documented for inclusion in the employee's personnel file. The letter should refer to the the company's relocation policy and summary the portions of the policy applicable to the employee. 

The most vital feature of transfer letters is their clarity. They should be straightforward and direct. This will avoid misunderstandings or confusion regarding the transfer.

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Topics: employee transfer, writing relocation offer letter, employee relocation

How To Determine Fair Tiered Relocation Packages

Posted by CapRelo on Thu, Jul 13, 2017


Companies offer relocation packages to their employees in tiers to help control relocation costs. Tiered packages are often established to address a variety of complex issues, but essentially it means that what is offered to one employee may not be offered to another. A company trying to retain existing employees or attract prospective talent may find they are able to offer more attractive packages using a tiered program. Determining a fair tiered policy is often merely a matter of weighing certain criteria against its value for the company.

You can learn how to save time and money using tiered relocation packages in our free guide.

Assign by Position and Experience

High-level services are usually considered much more valuable within a company than those functions carried out in lower level positions, which require fewer responsibilities and little need for certain skills sets. For this reason, employees who have reached certain levels in the company (professional, manager or executive level, for example) may be seen as more valuable within the organization and may be offered more robust relocation packages than others.

Examine Existing Living Status

Sometimes, an employee’s homeowner status could be one of the key factors in whether they are offered a higher or lower tier of relocation package. Employees who own homes may need to be offered additional benefits, especially when considering the complexities inherent in having to sell or rent their homes to relocate. Likewise, a company may determine that an employee who rents a residence will need less assistance and will have fewer difficulties moving.

Another factor that may be considered is if employees have families, in particular those with young children who might be more resistant to relocation than single employees. Offering employees with families a more attractive relocation package might help them overcome both practical and psychological barriers to moving.

Corporate policy and culture should always factor heavily into decisions that determine the features offered in tiered relocation packages. For some companies, financial factors may be the bottom line. Other companies may place higher value in employee morale, or in their public perception as an “employee corporation.” Senior management and Human Resources should therefore work hand in hand with the finance department to establish specific criteria when determining the features offer in tiered relocation packages.

Save Time & Money Using Tiered Relocation Packages


Topics: Tiered relocation packages, attracting new hires

How To Calculate Tax Gross-Up for Relocations

Posted by CapRelo on Tue, Feb 03, 2015


Relocation tax gross up defined:

When an employee receives a one-time tax relocation incentive or reimbursement of taxable relocation costs and the company adds to the reimbursement amount, a tax gross up occurs. Reimbursing transferred employees is good corporate relocation policy as it improves employee retention and productivity while helping maintain good customer/employee relations and management.

How is tax gross up calculated?

  • Flat Method – A flat percentage calculated on the taxable expenses and then added to the income. For example, an employer will gross up at a rate of 25% for taxable expenses.  If the transferee is paid $1,000, the gross up would be 25% of this, or $250, and therefore the transferee would receive a benefit of $1,250 total.  Note that the gross up is also considered taxable income and may create an additional tax liability to the transferee.

    It’s important to note that this method likely doesn't cover the employee's tax liability since the gross up is taxable income. Additionally, this method is not compliant with supplemental withholding regulations.

  • Supplemental/Inverse Method – This method is often used because not only are relocation expenses considered income, but the gross up is considered income too.  Therefore employers will pay the gross up on the gross up.  To determine the amount, add up all the tax rates (fed, state, OASDI, SS) and then divide the taxable expense by the sum of the tax rates. Take this number and subtract the taxable expense. 


    Supplemental-Inverse Gross Up.png

    This methodology covers gross up on the gross up, but may not accurately reflect the tax bracket of the employee.

  • True-Up Method – This method is typically handled by a CPA or full-service relocation companies and also incorporates the tax on tax calculation. The difference is this methodology takes into account employee income and IRS Form 1040 tax filing status. In most cases policy dictates that only company-earned income will be considered and other forms of income, such as spousal income or investment income, won't be taken into account.

Should your company handle relocation tax itself or give the job to a pro?

Many corporate accounting and finance departments, while adept at handling day-to-day corporate financial operations and record-keeping, may not have the expertise when it comes to accurately and fairly figuring tax gross up. Due to the complexity of tax laws and other local, state and federal regulations, turning the work over to a full-service global mobility management company may be beneficial.

The consequences of miscalculating or ignoring tax gross up:

  • Extra work and time (read: increased company expenses) as well as frustration for your accounting and HR departments if they need to recalculate and correct mistakes and possibly issue corrected W-2 forms (W-2C).
  • A possible audit and /or tax penalties and other fines.
  • Diminished employee morale due to being unfairly taxed, resulting in lowered productivity and retention rates.

The take-away:

Working with an experienced global mobility management company that can efficiently handle all aspects of a transfer may prove beneficial in eliminating tax errors and omissions. Among its many services, a good global mobility management services provider will track expenses and submit accurate reports of taxable costs as well as help calculate tax gross up. As one of your preferred suppliers, a trusted global mobility management company can give you and your transferees peace of mind – along with a lower tax bill. 


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Although this written communication may address tax issues, it is not a covered opinion as described in Circular 230.  Therefore, to ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments), unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein.

Topics: calculating tax gross up

Avoiding Employee Turnover After A Relocation

Posted by CapRelo on Wed, Mar 26, 2014

Please enjoy our video, "How To Avoid Employee Turnover After A Relocation - CapRelo."



Topics: employee retention, employee relocation concerns, talent management

Important Features of a Home-Finding Trip

Posted by CapRelo on Tue, Aug 20, 2013

istock_000010968215large-resized-600Competitive relocation policies should include components related to finding a home in the new location.  One such benefit is to offer one or two home finding trips to the destination location.  There are several additional provisions that are considered competitive components.

Our free article provides additional information on real estate considerations for your relocation policy.

House-Finding Trip Provisions

Locating an appropriate home in an unfamiliar new location is a major transferee concern. Whether they are homeowners or renters, relocating employees need assistance when moving. In addition to setting reasonable parameters and time periods for each trip, among the most valuable home-finding trip policy features are:

  • Airfare or mileage reimbursement.
    Depending on the distance of the destination location from the current workplace, transferees and their spouses may prefer to drive or need to travel by commercial airlines.

  • Lodging.
    Describe (or name) acceptable hotels and maximum nights that your company will permit. This is another competitive feature that permits you to exercise cost control, while clearly defining your reimbursement policy.

  • Rental car.
    Transferees need flexible transportation for visiting homes in the new location. Unless employees are relocating to the center of a major city, such as New York, where taxi-fee reimbursement may be a better option, providing a rental car for viewing houses is an important feature.

  • Daily meals allowance.
    Set reasonable per diem meal allowances, capped depending on the parameters of your house hunting policy features. For example, do you permit transferee only, transferee and spouse or transferee and family home-finding trip reimbursement? Defining your daily allowance per person should eliminate confusion or uncertainty.

  • Expert assistance from a real estate agent.
    Be sure to partner with a local or national real estate firm with at least one available agent who has proven experience in relocation house hunting necessities and time constraints. Transferees will maximize their home-finding time, while employers control costs and get the results they want.

These house hunting trip features, accompanied by logical, reasonable and equitable reimbursement maximums, accomplish at least two important goals.

  1. You will offer a competitive corporate relocation program that helps you control most home hunting trip expenses.
  2. Your transferees will endure less uncertainty, stress and concern with finding an appropriate home in the destination location.

Compare your home-finding policy benefits with competing companies’ policies.  Be prepared to modify your policy to keep your relocation program competitive in your industry.

When you combine consistency of application with flexibility to modify policies when necessary, your relocation program will produce the desired results. Surprises faced by employers or transferees are unwelcome events. Minimizing uncertainty and confusion with house hunting trips delivers rewards to employers and transferees alike, while ensuring a smooth, cost-controlled relocation experience.

Free Article:  A Guide to Developing  Relocation Policies

Topics: Corporate Relocation Costs, House Hunting Trips

Relocation Packages Designed to Attract the Right Executive

Posted by CapRelo on Tue, Jul 31, 2012

business-womanRelocation packages come in a variety of shapes and sizes to meet various corporate goals and budgets.  In recent years, as a result of difficult economic times, many organizations were forced to scale back the size of their relocation programs.  However, as the economy rebounds, it’s important for companies to re-examine their program, especially when trying to recruit for executive-level positions. 

Find out the 5 critical features of an executive relocation package in our free eBook.

Current Relocation Concerns

The current job market and continued real estate crisis has generated concern amongst corporations and professionals alike.  Corporations need to tighten the belt on their budgets while still working to offer job relocation packages that entice quality executives, and professionals are reluctant to relocate and make job changes for fear of the unknown. 

Before an executive will consider relocating for a job change, he or she will carefully consider questions such as:

  • Will I qualify for a mortgage?
  • Can my family and I establish a home there?
  • Are there rentals that meet my needs?
  • Can I sell my current house in this real estate market?
  • Does the school system meet my expectations?

Employers must creatively deal with these concerns in cost-effective manners.  This can be accomplished by developing a progressive domestic relocation policy that includes real estate assistance, the movement of household goods, and tax treatment.

Three Benefits Critical in Your Executive Relocation Package

Companies need to give their employees and/or potential recruits the tools to answer their critical questions and minimize the mystery and the stress of the unknown.  This can be accomplished by including critical benefits in the executive relocation package. 

Real Estate Assistance 
The challenge of selling a home is one of the top reasons employees don’t want to relocate.  The real estate crash placed homeowners in awkward and untenable positions, and many find themselves underwater (mortgage balance higher than market value of homes).   Companies offering relocation packages can fall short of executive’s needs should homeowners risk losing thousands of dollars because of a forced sale for relocation.  

A relocation package should include employer incentives such as loss-on-sale features, quick sale bonuses, buyer incentive assistance, and/or other creative housing-related benefits.  Transferring employees find these benefits critical to relocation options and choices.

Movement of Household Goods
Whether a relocation package includes a lump-sum payment or full reimbursement of costs for moving belongings and family, this benefit should be a relocation package component.  Some companies make relocating a DIY project, others offer the services of a van line, while others rely on a third party move management program to save work and stress on the employer and transferring employee.

With the real estate market flooded with short sales and foreclosures that require more time to close than the standard home sale, companies may want to consider extending standard storage times.  It may also be beneficial and valuable to a transferring executive or recruit to offer a trusted and proven professional mover to manage their large and unique moves.

Tax Treatment
Moving costs money, and employees need their relocation-related out-of-pocket expenses reimbursed in a timely and accurate manner.   If expenses are not properly coded or tracked, they could spin out of control.  That burden, along with end-of-year tax reporting related to relocation expenses, can cause unnecessary stress. 

A relocation package needs to include management of all invoicing, payments, tax filing, and tax gross-up benefits to make the process easy and hassle free.

At a minimum, HR professionals should consider including these three critical benefits in a relocation package.  Employers will decide if any additional benefits, e.g. retention bonuses, are featured in a relocation package.  If relocation policy design is an intimidating task, consider utilizing the expert services of a relocation management company like CapRelo.  Relocation policies that are designed and measured to meet strategic objectives are essential to a company’s success.

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Topics: relocation benefits, Home Selling and Purchase Assistance, Relocation Services, executive relocation package

Have You Met Carol Blair?

Posted by CapRelo on Wed, Jun 06, 2012

Editor’s note: We believe the success of CapRelo can be credited to our incredible team. Over the next few months we will introduce some members of our team. Today, we would like to introduce Carol Blair.

Carol Blair, Senior Relocation Consultant

Carol Blair, Senior Relocation Consultant, is affectionately known as “The Gatekeeper” after 15 years at our Bentonville, Arkansas office. She is responsible for reviewing all authorizations, uploading all pertinent information into CapViews™, and assigning a dedicated consultant to assist a relocating employee (also known as the transferee), which is all part of a Low Stress Relocation.

Carol says the most important thing she has learned throughout her time at CapRelo is recognizing that everyone is part of a team. To her, one of the perks of her job is getting to work with the different people within different Human Resources departments, and working on employee relocations. The daily interactions put a smile on her face and make her job enjoyable.

Carol maintains an even balance between being a relocation expert and her personal life. While she enjoys spending time outdoors gardening and doing yard work, her true love is reading, writing, and editing. She is a self-professed wordsmith and enjoys putting her literary talents to good use.

After 14 years of firsthand experience and willingness to continue learning and growing, Carol will do everything to make sure the relocation is as stress free as possible.

Topics: corporate relocation program, CapRelo Employees

Making Employee Relocation Desirable in a Down Real Estate Market

Posted by CapRelo on Mon, May 09, 2011

Fewer employees are willing to relocate for either a new or current job. That's not surprising in today's real estate market, where a home sale often means taking a large loss, or leaving the closing table without enough for a new home purchase.

  V  CRS KristinS Blog Posts Blog Photos falling home values resized 600

However, there are several ways companies can make employee relocation desirable, even with the added stress of selling a home in today's market. Here are three ways to help with home sales during employee relocation—and none of them involve your buying the employee's home or other large capital investments.  

  1. Rely on a relocation company with the right industry connections. When you're shopping for a relocation company, look for one with non-exclusive supply chain partners that know your region. Your relocation company should work with real estate agents who know how to negotiate the highest sale price for a home and home staging services that know the changes to make to a property to encourage a quick sale. You'd be amazed at the difference it makes in employee satisfaction and getting the optimum selling price quickly.

  2. Implement quick sale bonuses designed to take relocating employees out of the “I can't sell my home,” mentality and into a state of mind where they know they have the support to sell their home quickly. Again, it comes back to effective, non-exclusive supply chain partners that know the market.

  3. Low-priced, high-quality temporary living choices. Sometimes, a home just won't sell as quickly as you and your relocating employee needs it to. In this case, temporary living and flexible working hours that will permit the relocating employee to return home as necessary will help ease the transition during employee relocation.

Topics: Home Selling and Purchase Assistance

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