I am switching to Google in a couple of months. As is standard Google practice the relocation package comes in 2 options: - Cash out - Points which can be distributed to various services including full service move, car transportation, hotels, car rental, visit trips, housing services, etc. I have been told directly that the cash out option is taxed as normal income and Google does not do a tax gross up. I have also been told that most services received from redeeming points are also taxed as normal income however Google DOES do a tax gross up. The issue is that no one at Google can seem to tell me how the tax gross up is calculated, just that "it may not cover your entire tax liability. We are not allowed to give tax advice" and other unspecific responses. My general understanding is that tax gross ups are calculated in a way that covers 100% or close to 100% of the employee's tax liability, and any discrepancies are negligible. Does anyone know specifically if this is the case with Google, and if not at what rate is the tax gross up calculated? In the points package, there are a few services which would be nice but are unnecessary. Redeeming those wouldn't be worth it if I will still have a significant tax liability due to the redemption. #Tax #GrossUp
Clarification: the cash out option *includes* the tax gross up already added in. FWIW I wouldn't expect Google to miss the mark on the tax gross up that badly for the benefits
What's the cash out value?
It is basically like regular income. They just cut 40% up front
what’s tax gross up
Note that they won’t let you cash out until they unfreeze relocation benefits. Worth digging into that a bit.
Huh, that’s completely incorrect.
Relocation benefits can get unfrozen on a case by case basis. I got mine unfrozen so both options are available to me now at anytime. It was unclear if the cash out option was available or not before I got my benefits unfrozen.
The cash out value is usually much smaller than the actual value of the relocation benefits. Regarding the gross up, they’ll assume you’re in whatever tax bracket you’re in by virtue of your compensation at Google. Let’s say that you have other income that puts you in a higher bracket (or spouse’s income etc, Google will not take that into account). Similarly if you end up paying AMT, Google won’t compensate for that.
Thanks. This is what I was assuming and hoping to hear directly from someone at Google.
I was told that the relocation benefits are grossed up using supplemental tax rates. Is this correct? Can someone explain what this means? Also, does google use a flat rate or inverse method to calculate gross ups?
Tax grossed up is only at 22% the rest would need to be covered by employee
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