Has your company provided you an upfront lump sum to help cover expenses related to your corporate relocation? Some jokingly call this a "buck and a truck" or a "grand and a van", but managing your own corporate relocation is no laughing matter. You have a new job waiting for you and a start date in a new city, but there are many tasks ahead of you.
When you’re not sure where to begin, First Class Moving Systems can help!
From setting your budget to providing you with a realistic plan and timely delivery, we know what businesses expect when it comes to relocating employees—through our global network as an agent for North American Van Lines, we can get you where you're going quickly and affordably.
Avoid the Pitfalls of an Unprofessional Mover
Incompetent movers can wreak havoc on any relocation, but they can have an even deeper impact on corporate relocations when your new job expects you to be on-time, focused, and ready for your new life in a new destination.
At First Class, we have global clout to get your belongings to any corner of the world safely and in a timely manner.
We’re proud to be a company that holds several professional recognitions and affiliations, including:
- Certified ProMover with the American Moving & Storage Association (AMSA)
- Membership in the Employee Relocation Council (ERC)
- Agency with Prestigious North American Van Lines
- Accreditation with the Better Business Bureau
First Class meets all the necessary criteria to service your corporate relocation with efficiency and ease—you’ll want to steer clear of any moving company that cannot demonstrate their commitment to professionalism in the industry.
Know Your Tax Situation Before You Move
Unfortunately, lump sum payments for relocation benefits, including household goods moving, are taxable to the employee as earnings. This is because some employers structure their relocation program to cover costs for taxable moving expenses, such as:
- House Hunting
- Home Sale
- Temporary Housing
They then reimburse the "non-taxable" expenses. Under the current tax code, the lump-sum reimbursement amounts are fully taxable to the employee, and depending on the company program, either the company or the employee would ultimately bear the associated tax cost of including these amounts in the employee's wages.
Other companies have structured their lump-sum program to cover all relocation expenses. If the company uses this method, the lump sum would be fully taxable to the employee.
While some employees receive a "gross up" or tax assistance from their employer in order to provide the full recommended amount for moving, some do not. This creates a dilemma for the transferring employee, because there often isn't enough funds to cover all relocation-related expenses after 40%-45% goes to taxes.
The employee should be instructed to track the "non-taxable" expenses, as a claim for a qualified moving expense deduction on their U.S. federal individual income tax return. The applicable moving expense amount would then be a reduction to a taxpayer's adjusted gross income (AGI).
If given a lump sum payment, the employee's income could be increased enough that it places them over the threshold of a higher tax bracket which will cause the employee to have to pay more in taxes for all of their wages and not just the amount tied to their relocation. In addition, a lump sum payment that goes onto an employee's W-2 may elevate the employee over the threshold to be subject to the new Medicare Surtax of 0.9%, as required by the Affordable Care Act.
While the income subject to tax under these new provisions is different, there is an overlap in the definition of taxpayers who are subject to these new taxes. The Medicare Surtax of 0.9% applies to individuals who have modified adjusted gross income ("MAGI") in excess of certain threshold amounts: $250,000 in the case of married taxpayers filing a joint return or a surviving spouse; $125,000 in the case of a married taxpayer filing separately; and $200,000 for everyone else.
Direct Billing Option for Employee Relocation
Payments made directly by your employer for household goods moving services do not need to be reported on your W-2 or IRS 3903 form. Therefore, if your company arranges for a no-obligation, direct billing arrangement with First Class, it will eliminate a tax nightmare for you and your employee!
Direct billing also allows for free $0 deductible, Full Replacement Valuation Coverage in the rare case of loss or damage. It also allows for priority dispatch and van assignments to our top-quality drivers.
Get More Information on Lump Sum Administration for Corporate Moves
You need to plan and execute your corporate move as efficiently as possible, and now is the right time to contact First Class Moving Systems to learn more about our comprehensive employee relocation services. Contact us today by phone, or simply fill out our online form now to request your free price estimate and consultation.