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
- 2018 state gross-up is now taxable if the total of the state and local taxes exceeds $10,000
- The Child Tax Credit
- $2,000 refund per child under the age of 17 before 12/31/18
- The phase-out limitation new starting point is increasing:
- Married Filing Jointly: from $110,000 to $400,000
- Single: $200,000
- 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:
- Married Filing Jointly: $24,000
- 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.