The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), signed into law by the President on 27 March 2020, delivers relief in the form of an immediate payment from the IRS for certain individuals, including many mobile employees. Mobility programs should evaluate the impact of these potential payments and the related tax credit on their mobile populations, programs, and policies.
The CARES Act provides ‘2020 recovery rebates,’ which are credits for eligible individuals determined based on filing status and number of qualifying children and phased out for taxpayers with higher adjusted gross income (AGI). An estimate of the credit will be automatically paid to certain individuals as soon as possible but no later than the end of 2020 – referred to as an ‘advance refund.’ Although the credit applies to the 2020 tax year, the advance refund amount will be determined with reference to 2018 and 2019 tax year data for most taxpayers.
Mobility programs may have employees on assignment or recent transfers, whereby the amount of relief (or timing of relief) will be directly impacted due to the assignment or transfer. For example, some participants may not receive an advance refund and/or 2020 recovery rebate credit even though they would have had they lived and worked solely in their home location. Still others may receive a payment that they otherwise would not have received but for their relocation. How/should these payments be equalized?
This Insight describes some of the many resulting challenges and actions to consider.