Tax Season Starts Now: Preparing Your Gross-Up Strategy for Q4 & 2026
Most HR and mobility teams don’t think about tax season until it’s already here. But by then, it’s often too late to fix the issues that can derail employee satisfaction, inflate costs, or trigger compliance headaches.
If your company reimburses employees for relocation expenses, allowances, or bonuses, tax gross-ups must be handled accurately and proactively. And Q4 is the moment to get your strategy in place—before year-end reporting and 2026 planning kick into full swing.
Here’s what you need to do now to ensure your gross-up strategy is audit-ready, employee-friendly, and future-proof.
Why Gross-Ups Deserve Year-End Attention
A tax gross-up ensures that when your company pays a taxable benefit (like a relocation bonus or temporary housing), your employee receives the full intended amount after taxes. But when gross-ups are inaccurate, inconsistent, or poorly documented, the consequences show up in Q1—often in the form of:
Employee complaints
Unanticipated payroll tax corrections
Delayed W-2 filings
IRS audit exposure
Negative impact on relocation satisfaction
Most of these problems are the result of poor planning, not bad intent. That’s why smart teams start in Q4.
What to Review Before Year-End
1. What’s Being Grossed Up—and What’s Not?
Create a list of all taxable relocation benefits issued this year, including:
Lump-sum relocation payments
Temporary housing stipends
Meal and travel reimbursements
Home sale or lease-break assistance
Any cross-border allowances
Are they being consistently grossed up? Are your calculations documented?
2. Which Gross-Up Method Are You Using?
Using a flat rate (e.g., 25%) might not cover higher-taxed employees.
Consider switching to inverse or marginal rate calculations to ensure accuracy—and fairness.
-Under-grossing can leave employees frustrated at tax time.
-Over-grossing inflates costs and payroll liabilities.
3. Are You Ready for Multi-State or International Reporting?
If employees have moved across tax jurisdictions (or across borders), your gross-up reporting must reflect:
State-to-state compliance
Local tax variations
International treaty rules and social taxes
FX impacts and timing differences
This is where even well-run domestic programs often get caught off guard.
4. Have You Audited Your Vendor or Payroll System?
If gross-ups are processed manually or through outdated tools, errors are likely.
Now’s the time to ensure:
Your system supports year-end reconciliation
You have audit trails for every payment
Payroll and finance teams are aligned
What a Strong Gross-Up Strategy Looks Like
A compliant, efficient gross-up process should include:
Pre-calculated gross-up tables by region or employee type
Consistent methodology across business units
Documentation and reporting aligned with payroll and tax filings
Transparent communication with employees
Integration with relocation policies and payment platforms
How Orion Mobility Helps You Prepare
At Orion Mobility, we help companies automate, standardize, and streamline their gross-up strategy—before tax season catches up.
Our year-end tax support includes:
Reconciliation of all relocation-related taxable benefits
Smart, region-specific gross-up calculations
Payroll and reporting file delivery
Compliance assurance across states and borders
Clear communication templates for employees and HR
Whether you’re closing out Q4 or planning for 2026, our team helps you stay proactive and protected.
Final Takeaway
Don’t let gross-ups become a January surprise.
Use Q4 to get ahead, tighten your processes, and ensure every employee ends the year with confidence—and every HR and payroll team starts 2026 with clarity.
Ready to review your tax gross-up strategy before year-end?
Talk to our team to prepare your relocation and reimbursement programs for Q4 compliance and a strong start to 2026.