If they won't put your signing bonus on a 1099, however, you are better off with the moving expense reimbursement as you will pay Medicare taxes only on the excess of the reimbursement over your actual expenses. Choosing between offering a signing bonus or a relocation package can be difficult, of course. In a lump-sum bonus program, the employee is responsible for the relocation bonus tax. How is the lump sum calculated? When corporate relocation packages come into play, you may have little choice concerning the moving companies and the real estate agents you can work with (many firms will reimburse you for your relocation-related expenses only if you use the services of specific movers and real estate agents that pay them hefty referral fees). The Relocation Bonus. While itâs exciting to be told that you will receive $10,000 to help you move, the reality is that a lump sum relocation payment is considered income. Bonuses and employer paid moving expenses, such as house hunting relocation reimbursements, are additions to the employee's taxable income, requiring employers to also pay standard payroll taxes such as Federal, State and FICA. This can add 45 to 70%+ to the total spent by the company. Many companies have moved away from the administration side of a relocation program that required reimbursements and are instead using a âlump-sumâ approach to support relocating employees. This could include but is not limited to: assistance with the sale and purchase of a home, final destination travel, the transport of household goods, and temporary housing. However, bonuses, even when generated by transferring an employee from one place to another, remain taxable income. The costs depend on the employeeâs specific situation, family size, extent of possessions and family size. I am accepting a job. Contact us to learn how we can partner with your company to provide top of the line corporate housing to your employees. A physician sign-on bonus can range from $10,000 to over $125,000. When a company provides a relocating employee with a lump sum, they're basically giving them a signing bonus that is intended to be used for the relocation process. All rights reserved. Orchestration of the move: Often, these services are provided by a third-party relocation management company; sometimes theyâre provided by in-house mobility units. Only expenses that are on our list of eligible relocation expenses can be reimbursed tax free. Many employers offer bonuses or lump sums to employees agreeing to relocate. A relocation incentive may be paid only when the employee's rating of record under an official performance appraisal or evaluation system is at least \"Fully Successful\" or equivalent. Larger companies who relocate employees all the time might combine giving you a lump sum or reimbursement along with directly ⦠UrbanBound sees two types of relocation benefits: For UrbanBound, a sound relocation package can be the following: Not every company is able to offer a comprehensive relocation package. Are they offering a relocation reimbursement, a relocation sign-on bonus or what could potentially be a more comprehensive relocation package, a mix of both with some variations? Common moving expenses, which can be reimbursed later, can include: It clarifies that bonuses as incentives or payments to defray increased cost of living must not be confused with reimbursing moving expenses that are the result of a job relocation. Some employers have turned to the opposite approach of a relocation package: awarding cash benefits, also called relocation bonus, lump sum or cash allowance, without accompanying services. People can make considerable money on relocation packages, but these can be subject to IRS regulations, at least in the United States. While this is a welcome benefit, it’s important to understand the difference of all the relocation packages. Whether the reimbursement of re-location expenses qualifies for the exemption provided in Section 10 (14) (i) of the IT Act. Many companies choose to provide tax assistance (tax gross-up) to further entice an employee to relocation. Offers affordable, predictable budgeting for employers, plus opportunities to save if not all benefits are utilized. Itâs intended to sweeten the deal or convince the candidate to accept a job offer. *** Complete transcript: âHey there, Kelly House, Home Sale Counselor with Plus Relocation. My W-2 shows it lumped with the general wages earned in box 1 and nowhere else. Under this arrangement, employees are given a fixed sum and directed to make their own arrangements. 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