Plus Relocation

How might relocation impact COVID-19 stimulus payments?

Your employees’ eligibility for COVID-19 relief payments could be impacted by relocation benefits they received. Senior Director of Operational Analysis Angela Sieber has more in this Remote Relo Tip Tuesday.

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Complete transcript: “Hi, I’m Plus’s Senior Director of Operational Analysis Angela Sieber, and welcome to a remote edition of Relo Tip Tuesday. As we’re all practicing good social distancing, I’m coming to you today from my home. My question is, ‘How might relocation impact COVID-19 stimulus payments?’

The U.S. government passed a law to provide a one-time relief payment to citizens due to COVID-19. The stimulus is actually a credit on the 2020 tax return; however, payments are being made now to get money into U.S. citizens’ hands. Let’s look at how relocation might impact these payments.

Let’s assume we have a single employee who relocated in 2019, their adjusted gross income is $70,000 and they had taxable relocation benefits of $30,000. The threshold to receive the full $1,200 credit for an individual is $75,000 of adjusted gross income. Assuming this employee filed their 2019 tax return, you can see how the taxable relocation expenses have pushed this employee’s adjusted gross income over the $75,000 threshold, and they will not be receiving a payment at this time. However, if they had not filed their 2019 tax return, the 2018 tax return would be used, and the employee would be eligible for a payment at this time.

In either scenario, the 2020 tax return will be used as a reconciliation. Assuming that the adjusted gross income returns to $70,000, this employee would be eligible for the full credit on their 2020 tax return. If they did receive the payment at this time, the credit would be reduced to zero. If they did not, they will receive the full credit on their return.

You can see how there are many variables that factor into a relocating employee and their eligibility to receive a stimulus payment for COVID-19. If you receive questions from relocating employees, it would be important to direct them to a tax provider so they can receive some information on whether relocation has, or has not, impacted their ability to receive the credit. Stay safe, and thanks for watching.”