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The Two Keys to Successful Year-End Tax Planning in Global Mobility

5 min read
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Year-end tax planning can be hectic for any organization, especially those whose work involves relocation or global mobility.

Employment statuses frequently change throughout the year, and of course, reporting requirements vary along with them. Often, people fall off the radar for tax-reporting purposes when they change geographical location; or they may switch to a different payroll system within the same company, with different paymaster rules coming into play. That means finance departments have the task of communicating clearly with an ever-evolving variety of outside parties.

In our experience working with clients with a globally mobile workforce, we have found two keys to mitigating financial risk and eliminating surprises in year-end tax planning. The first is to identify all stakeholders correctly. The second is to question your assumptions.

Who are the stakeholders?

Because global mobility is so complex, it’s essential to list all stakeholders concerned in the year-end tax planning process.

This list will include, but is not necessarily limited to:

  • A company’s internal mobility, HR, corporate tax, payroll, accounts payable, and finance teams; and


  • External sources include payroll vendors, payroll tax advisors, relocation providers, tax providers, and expense processors. Ideally, your team has been in contact with all relevant people throughout the year, but communication must be clear and regular at year-end.


Each stakeholder has to be advised (and regularly reminded) of specific key dates in the year-end process:

  • The cutoff date for payroll reporting (usually near the end of November): We have found it helpful to pick a consistent date, such as November 30th, since it’s easy to remember. However, it is ultimately up to the company to choose this date based on their internal year-end calendar and processes.


  • The cutoff date for expense reimbursement: Will the company allow you to reimburse expenses in the current year even after the cutoff date, or should you hold those payments until January?


  • Final update and review date (usually around mid-December): Payroll updates for relocation are often sent periodically throughout the year, typically monthly or quarterly. The failure to double-check previous updates is common and can lead to significant errors in W-2s. 


After the company has recorded the final payroll update, reconciliation should be done to confirm that all parties’ final numbers for relocation earnings during that tax year are in agreement.

  • RTR (Relocation Tax Reports) date (January): Advise the company when you will be sending transferees data that summarizes what was reported on the W-2 form for relocation-related activity.


What are your assumptions?

Again due to the complexity of global mobility, year-end tax planners are wise to question the assumptions they make related to reporting.

Here are a few of the areas that we have found to be especially problematic:

  • LTIAs (Long-Term International Assignments): This group of employees has to be appropriately segregated. Before updates are made to payroll records for LTIA employees, tax planners should go through and confirm, in each case, what they’ve assumed about employment status and reporting. Have they been correctly identified by assignment type, e.g., short-term assignment, Canadian move, multiple moves? What individual gross-up arrangements have been made?


  • Spending and budget caps: Many companies have defined spending caps in their relocation budgets. However, if a company has 100 transferees and seven different departments charged with reporting on them, spending caps can get overlooked, leading to difficult year-end meetings with HR.


  • Non-US payroll: When an employee leaves a US system, they are often “out of sight, out of mind” when it comes to reporting wages and expenses. Not only does this wreak havoc with a company’s internal data, but it also presents problems for an employee when it comes to filing their tax return. 


For example, an employee transferred to Germany may be having German taxes withheld by that division’s payroll provider while nothing is done to address US taxes. Reporting requirements will vary depending on the countries touched during the assignment or relocation, so it is critical to ensure a compliant process through a tax provider with knowledge of the specific laws in those locations.

  • Terminations: If an employee left and his contract obligated him to repay relocation expenses, did he do that—and was the transaction captured so that reporting numbers match? It is vital for all parties involved, such as the company’s AP and payroll teams and the relocation management company, to be made aware of any situation where repayment was made.


In many ways, it’s not the minutiae of calculations that cause problems in the year-end tax-planning crunch—it’s the failure to step back and look at the larger picture. Tax planners can save themselves time and headaches by remembering to ask themselves two fundamental questions: Who are our stakeholders? What are our assumptions? 

About the authors: Brian Vitello, CPA, is the COO of Ineo Financial Solutions, a strategic partner for companies seeking comprehensive, professional, and seamless back-office financial services for their mobility programs. Kevin Clark, CPA, CRP, is Director, Financial Solutions at Ineo.

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