Recent Tax Updates

2018 Supplemental Rate

The IRS released today the updated 2018 withholding tables which include a decrease in the 2018 supplemental rate from 25% to 22%. The withholding tables must be implemented by February 15, 2018, however, employers are encouraged to start using them as soon as possible. Employees will begin to see the effects of the new tax laws in their paychecks in February.

For more information and to see the IRS 2018 Withholding Tables, visit https://www.irs.gov/pub/irs-pdf/n1036.pdf

2018 Federal Tax Information and Gross-up Percentages

This handy guide provides frequently sought after tax information, rates, and gross-up percentages for 2018, along with a comparison to 2017 data. This guide is even more important while we implement the newly passed tax reform into our mobility programs.

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What 2018 Tax Reform Means for the Mobility Industry

Tax reform has officially passed both the House and the Senate and is now on its way to the President’s desk.

Starting January 1, 2018, this is what the mobility industry needs to know:

  • State and Local Income Property Taxes
    1. 2018 state gross-up is now taxable if the total of the state and local taxes exceeds $10,000
  • The Child Tax Credit
    1. $2,000 refund per child under the age of 17 before 12/31/18
    2. The phase-out limitation new starting point is increasing:
      1. Married Filing Jointly: from $110,000 to $400,000
      2. Single: $200,000
      3. More tax reconciliations will be needed in tax year 2018
  • No more Itemized Deduction nor Personal Exemption Phase-outs
  • No more Personal Exemptions
  • Standard Deductions increasing:
    1. Married Filing Jointly: $24,000
    2. Single: $12,000
  • The mortgage limitation is being reduced from $1,000,000 to $750,000 for new mortgages taken out after 12/14/17.
  • Exemption amounts have increased for AMT, this still involves complex calculations – more tax reconciliations will be needed in tax year 2018.
  • There is no change to home sale rules – remains 2 out of past 5 years residency requirements.
  • Both HHG and Final Move expenses become taxable on January 1, 2018. This increases the average gross-up by approximately $10,000 to $15,000. Companies will need to budget accordingly for this change as well as adjust their relocation accounting systems and payroll interfaces to ensure compliance.
  • The supplemental payroll withholding rate has been reduced from 25% down to 22% on supplemental payments under one million dollars, and from 39.60% to 37% on supplemental payments exceeding one million dollars.

These new laws affect both company policies and compliance requirements. All companies should seek guidance and approval from their internal tax, legal and HR departments plus their external auditors as well.

Ineo Global Mobility Tax Services can help you navigate these changes with gross-up audits, tax Q&A, and policy tax consulting. Visit www.ineomobility.com/tax-services/ or call 303.219.7291 today to learn more about how Ineo can help you ensure that your mobility program stays compliant while implementing these changes.

2018 Standard Mileage Rates

The IRS has announced the 2018 mileage rates. These rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes:

  • Business mileage rate increased to $0.545/mile
  • Charitable mileage rate remains unchanged at $0.14/mile

If you have questions regarding mileage rates or any of our tax updates, please contact Ineo Tax Services at (203) 529-3020.

2018 FICA Limit Increase

The 2018 FICA limit has increased from $127,200 in 2017 to $128,400 in 2018. The Social Security Administration had originally announced that the increase would be $128,700, however, this increase was revised after receiving additional salary data that had not been included in the original calculation.  The wage base calculation is determined by annual increases in a national wage index. Mobility professionals must be aware of this change as it relates to gross-ups and payroll calculations.

 

For questions related to gross-up calculations and audits, please reach out to Mary Reilly at 303.219.7291 or mreilly@ineomobility.com.