2013 Global Relocation Conference: Audit/Year-end Tax Return Presentation


Gross-up AuditsBest Practice

Steve Dolins, CPAThe Dolins Group

847-498-1040

[email protected]


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


• 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


• 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


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


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


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


Thank You

Steve Dolins, CPA

The Dolins Group

847-498-1040

[email protected]

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2013 Global Relocation Conference: Audit/Year-end Tax Return Presentation

Economy & Finance

Transcript of 2013 Global Relocation Conference: Audit/Year-end Tax Return Presentation