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Final Travel to the New Location
Chances are, you will be eager to get your new hire settled in at their work location as quickly as possible. Yet, according to one airline study, the most affordable way to book flights is to do so 70 days in advance. If your employee is on a tight relocation schedule, they can expect to pay more for their flights.
Tax Consequences of Relocation Benefits
When the Tax Cuts and Jobs Act went into effect on January 1, 2018, it changed the way the IRS treats relocation benefits. No longer are employee relocation benefits deductible to employers. Instead, they are treated as taxable income for employees.
This leaves employers with two unappealing options: gross up the relocation allowance paid to employees to cover their taxes (which drives up your cash-only relocation program costs), or let employees and candidates bear the burden—and risk driving them away.
Get More from Your Cash-Only Relocation Program
Once you consider actual relocation costs—not to mention the fact that most employees don’t know how to allocate their relocation dollars best—it’s easy to conclude that merely offering a cash-only relocation program may no longer be your best move.
Even if you’re not in a position to increase your relocation allowance right now, shifting to a managed lump sum relocation program may enhance your employees’ relocation experience. Under these programs, employees still receive a budgeted relocation allowance, but they also gain access to a preferred network of movers and suppliers, plus personalized guidance for making the most of their relocation dollars.
In short, any amount relocation package will likely be appreciated by your employee. However, it’s essential to be realistic about what amount will actually provide your employees with a great experience. While $5,000 upfront might seem like a generous amount, when you consider everything that goes into the cost of relocating, it may fall short and leave your employees frustrated and paying out of pocket. However, there may be a way to make your cash-only relocation program seem like a million bucks! You have to find the right partner. Next step: see how we do it at UrbanBound.