U.S. Stimulus Payments and Your Relocating Employees 04.1.2020 | Marianne Schmidt

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In the latest news related to the COVID-19 pandemic, the IRS announced that one-time stimulus payments will be sent to eligible tax filers in the U.S. beginning in roughly three weeks, with no action required for most people.

According to the IRS, relief payments of $1,200 will be paid to individuals with an annual adjusted gross income of up to $75,000, while married couples filing jointly will receive $2,400, provided their annual adjusted gross income is less than $150,000. In addition, $500 will be paid for every child under the age of 17. Income levels will be determined based upon 2019 adjusted gross income if the taxpayer has already filed his/her 2019 tax return; if not, income will be based upon adjusted gross income from his/her 2018 tax return.

The payment amount is reduced by $50 for every thousand dollars above the $75,000/$150,000 thresholds. So, for example, if you’re a single taxpayer who made $75,000, you’ll receive the full $1,200. But if you made $76,000, you’ll receive $1,150. The payments then phase out to zero above income levels of $99,000 for single tax filers and $198,000 for joint filers. These payments are actually a tax credit advance against 2020 taxes.

For corporate relocation managers, it’s important to note that employees who relocated over the past year may find themselves pushed over the stimulus threshold after relocation earnings have been added to their income. In the U.S., benefit payments associated with relocation are considered taxable as are the associated gross-up costs. On top of that, formerly excludable moving expenses are now taxable under the Tax Cuts and Jobs Act of 2017.

If 2019 relocation earnings push a transferee over the threshold amounts, they will not receive the relief payment now but will be eligible to receive the amount as a credit when they file their 2020 tax return provided their adjusted gross income is below the threshold amounts.

Managers should be advised that their employees may have questions or concerns as to why they don’t qualify for a payment. You should be prepared for these questions, and your Weichert tax team is available to assist!

All of the latest Coronavirus news and insight for mobility managers is collected at our COVID-19 Resource page.

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Written by Marianne Schmidt

Marianne Schmidt

Marianne is our Vice President of US Domestic Tax Services and Reporting, overseeing everything from domestic tax implementation to year-end reporting for relocated employees, and managing all North American tax gross-up functions. She serves as a Trusted Advisor to clients, advising them on payroll processing and tax methodologies, and works to educate clients and senior management on domestic tax issues and strategy.

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