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How Relocation Tax Gross ups Work for Employers
Employers aren’t required to pay relocation tax gross ups to employees, but in our experience, the vast majority do.
The reason is simple. The whole point of offering relocation benefits to current or future employees is to entice them to upend their lives (and often their families’) to make a corporate move.
Moving is a very big deal. It’s one of life’s top 10 stressors. Relocation benefits are designed to ease the process—to create a positive relocation experience, so the employee can start their new job with a clear head and good attitude.
Sticking employees with a big tax bill won’t accomplish that. In fact, it’s a great way to undercut all the good will created by offering relocation benefits in the first place. Unhappy employees are not productive employees. Nor are they the most likely to stick around.
That’s why relocation tax gross ups are so important to both employees and employers.
One Key Relocation Tax Gross Up Tip for Employees
If you’re offered a job that involves a move, ask if relocation benefits are included. If not, negotiate them before you accept the offer. Make sure those benefits include a tax gross up; that’s something you can negotiate, too.
Don’t feel awkward about it. Employers expect it. Think about it: if you end up paying for your relocation yourself, that’s thousands of dollars out of your paycheck. If benefits are provided but a tax gross up is not, that’s thousands, too.
Three Key Relocation Tax Gross Up Tips for Employers
Paying relocation tax gross ups is an expense and a headache most employers could do without. That said:
- Do it. Pay them. Tax gross ups are a critical feature of a competitive relocation package.
- Find ways to offset the cost without weakening your relocation benefits. For example, use a relocation provider that’s negotiated significant vendor discounts and doesn’t accept vendor commissions.
- Offload the administration of your program to an expert. Like everything tax-related, relocation tax gross ups are complex and risky—and you’ve got to get it right.
As far as we know, relocation tax gross ups are here to stay. That’s why it’s not only important to know what the term means—but what it means to you.