The Tax Implications of the American Rescue Plan for Mobility

With tax season underway, here’s what you need to know about how the American Rescue Plan affects mobility.

On 11 March, President Joe Biden signed the American Rescue Plan, the sixth U.S. economic stimulus package since the beginning of the COVID-19 pandemic into law. The stimulus provided relief to small businesses, employers, families, individuals, and for infrastructure and transportation. The Internal Revenue Service (IRS) extended the tax filing deadline from 15 April to 17 May, so tax season is well under way. Here’s what you need to know this tax season:

Mobility program managers will also need to review equalization policies due to these recent changes. Some issues to consider:

  • Will the company true-up credits due to relocation income? Most of the credits provided in the American Rescue Plan may be limited based on income thresholds.
  • For those individuals that were equalized to their home country outside the U.S., companies will need to review whether the employee should keep the recovery rebate credit or if it should be repaid to the company.
  • Although the recovery rebate credit and stimulus checks are not considered taxable income for U.S. federal and state purposes, this may not be true if those individuals are living outside the U.S. The tax treatment in other countries should be reviewed. Program administrators may need to review if a gross-up is needed on these payments when received outside the US.
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How This Impacts Mobility

The above are not new issues for global mobility managers. However, the recent legislation has increased the availability of additional rebates and credits and potentially more individuals will be impacted by the changes. Should any members have questions, please reach out to our Vice President of Member Engagement Rebecca Peters, rpeters@worldwideerc.org.

Jen Stein is managing director of Global Tax Network and Vice Chair of the Worldwide ERC® Tax Forum.