Flat Method Gross Up
The flat method is a flat percentage calculated on the taxable expenses and then added to the income.
Supplemental/Inverse Method Gross Up
The supplemental/inverse method is often used because not only are relocation expenses considered income, but the gross up is considered income too.
This methodology covers gross up on the gross up, but may not accurately reflect the tax bracket of the employee.
Although this written communication may address tax issues, it is not a covered opinion as described in Circular 230. Therefore, to ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments), unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein.