Lump Sum payments are a popular option for financing employee relocations but can come with their own set of challenges to manage. One of the most common challenges companies face when utilizing lump sums for relocation is contending with the tax implications via a Gross-Up payment. Gross ups are additional payments provided to the relocating employee from the company to compensate for the employee's additional tax burden as a result of receiving a lump sum. From a tax standpoint, lump sum payments are viewed as additional income and as such increase the amount of taxes an employee owes at the federal and, where applicable, state level as well. It can be incredibly difficult for companies to accurately calculate the correct gross up amount they need to pay to a given employee. That is why we are providing our gross-up calculator as a free resource to help companies like yours better manage and budget your relocations.
The gross up calculator is easy to use. First, start by plugging in the lump sum amount you are looking to gross up in the top box next to "Amount to Gross Up". Next, simply input the applicable tax rate for your state and the appropriate OASDI and Medicare tax rate for your relocating employee into their dedicated boxes. You can find a list of state income tax rates below the calculator if needed. The calculator will provide you with the total lump sum amount inclusive of the gross up, just the gross up amount and a breakdown of the gross up payment by tax type.
Gross Up Calculator
1-(Fed + State+OASDI+Med)
Federal Gross Up Payment:
State Gross Up Payment:
OASDI Gross Up Payment
Medicare Gross Up Payment:
Gross Up Amount
TOTAL GROSS UP PAYMENT
Disclaimer: This calculator is only meant as a guide. Your particular gross up methodology may differ. Please contact Bobbi Maniglia for any questions regarding your relocation policy or benefits by emailing Bobbi.Maniglia@northAmerican.com
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