Published on March 12, 2014
© Copyright The Dolins Group 2013
© Copyright The Dolins Group 2013 Gross-up Audits Best Practice Steve Dolins, CPA The Dolins Group 847-498-1040 firstname.lastname@example.org
© Copyright The Dolins Group 2013 Session Overview • What is a Gross-up Audit • Trends in Tax Law • Most Common Reasons for an Audit • Gross-up Audit Options • Common Mistakes Made
© Copyright The Dolins Group 2013 • A comparison of a transferees gross-up calculated and paid by their employer vs. their actual tax burden as a result of their relocation. What is a Gross-up Audit
© Copyright The Dolins Group 2013 • Tax law continues to become more complicated • The number of taxpayers impacted by the Alternative Minimum Tax grows each year • States continue to update their tax code and increase rates to generate additional revenue • More tax credits and deductions available today vs. 10 years ago – Child Tax Credit – Sales Tax Deduction – Education Credits – First-time Homebuyer Tax Credit Trends in Tax Law
© Copyright The Dolins Group 2013 Common Reasons for a Gross-up Audit • Transferee is in a higher tax bracket due to relocation • Transferee has been impacted by AMT due to relocation • Loss of credits or deductions to relocation • Additional State taxes paid due to short term assignment
© Copyright The Dolins Group 2013 Gross-up Audit Options • Does the company want to consider spousal income • Do you annualize your experienced new hires • Will the company protect the transferee for an increased tax burden on their regular earnings as a result of the move
© Copyright The Dolins Group 2013 Common Mistakes • Accountant or transferee is not familiar with company’s gross-up policy – Outside income is used in calculation – Expenses not eligible for gross-up per the company’s policy are included in the calculation • Mistakes made on tax return – Accountant or transferee deduct all moving expenses on form 3903 – Accountant or transferee adds relocation expenses already included in their W-2 onto their 1040s • Mistakes made on “with” and “without” relocation comparison – Points/Originations fees paid by company are deducted on the “without” move calculation – Company paid State gross-up is deducted on the “without” move calculation
© Copyright The Dolins Group 2013 Thank You Steve Dolins, CPA The Dolins Group 847-498-1040 email@example.com
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