Coping with the tax challenges of relocation and mobility

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Today’s workforce has grown increasingly mobile, with more and more employees traveling or changing their work location domestically. This increased mobility brings new financial challenges for employees that can be addressed by Ernst & Young LLP’s Employee Financial Services (EFS) practice — a valuable source for financial education and planning for affected employees.

Employees who may be going through a relocation due to a change in job location or who are required to cross-state travel as part of their job requirements have many tax and financial planning questions that often go unanswered.

By better managing their financial lives and understanding the tax implications of cross-state travel, employees can lower money-related stress. Reduced stress leads to increased confidence on the job, improved productivity and a more engaged workforce.

  • A case study: helping a technology consulting firm

    Through the EY Financial Planner Line® (EYFPL), we have provided domestic travel tax and financial planning support to employees of a large technology consulting firm since 2004. Our planners provide employees with tax reconciliation calculations to determine any increase in taxes that they have incurred because of work-related travel.

    They also provide employees with financial guidance and support when their job location is being permanently relocated to another state, assisting them on topics such as cash flow management, home buying and tax planning. The EYFPL is staffed by experienced tax professionals who either have obtained or are obtaining an advanced designation such as CPA, CFP, MST or Enrolled Agent.

    In our support of this organization, we:

    • Serve as a trusted resource for employees who have tax questions related to their domestic travel
    • Provide employees with the peace of mind of knowing they do not have to pay out of pocket for any excess tax incurred working outside their regular work state
    • Run estimated tax calculations that examine what the employee’s tax situation would have looked like had he or she not been on assignment and incurred travel-related expenses
    • Review and provide guidance on relocation policies such as home buying assistance, relocation payments and moving cost reimbursements
    • Field questions on a variety of topics, such as nonresident state filing requirements, tax credits for out-of-state taxes paid and general questions on the domestic travel program

    During our time serving this organization, we have experienced strong usage. Variables that can affect usage include:

    • Communication about the program
    • The number of employees who are on domestic assignment or have been relocated
    • The tax filing deadline (March/April)

    Each year, we have approximately 7,000 employees who are eligible for domestic tax and relocation services. Feedback from employees has always been positive, particularly for our responsiveness and understanding of state tax and the company domestic travel and relocation program details.

  • How we can help

    Examples of how EFS can assist include the following:

    • Explaining potential filing requirements for employees’ resident and nonresident state returns
    • Providing guidance on how to calculate any resident state tax credits for nonresident state taxes paid
    • Reviewing financial considerations for a new work location, such as housing, impact on cash flow due to change in cost of living and tax planning
    • Reviewing and providing guidance on relocation policies such as home buying assistance, relocation payments and moving cost reimbursements
    • Providing employees and employers with tax equalization calculations to keep employees who travel for work tax-neutral
  • What we do for employees

    We provide financial guidance to employees through the objective planners on the EY Financial Planner Line®, through the intuitive content of the EY Financial Planning Center® and through group learning settings via live seminars or webinars.

    EY Financial Planner Line®

    • Unlimited toll-free access to an experienced, credentialed and objective Ernst & Young LLP financial planner
    • Financial planners who are trained on sponsoring companies’ benefit plans and programs
    • Common topics include the impact on state tax filing for working outside the resident state, the impact of income reported to multiple states and the impact on federal tax filing

    EY Financial Planning Center®

    • A unique and interactive planning experience that grows as the individual’s needs and knowledge level expand
    • Robust resources, including a financial wellness assessment that measures the individual’s comfort level with financial issues, both current and future

    Seminars and webinars

    • Group learning that informs participants about their benefits and comprehensive financial planning
    • A list of action items that apply to an employee’s personal situation
  • What we do for employers

    Employers receive support through:

    • A dedicated Ernst & Young LLP project manager, including quarterly service reviews
    • Quarterly engagement reports highlighting employee activity
    • Collaboration on communication materials to promote services

    Excluded services

    • Tax filings or tax preparation work
    • Legal guidance or advice

How we make a difference

The real value of Ernst & Young LLP’s financial wellness programs is in the results. Following an Ernst & Young LLP financial planning session, generally 9 in 10 employees say they are ready to take action on their personal action plans. Results such as these lead to improved financial wellness, increased workforce productivity and a positive impact on your organization’s bottom line.

View our other targeted programs developed to assist with other unique business challenges