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Legal Compliance in Relocation Flashcards

7 cards from real CRP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Legal Compliance in Relocation flashcards as text

  1. An employer pays a relocating employee a $15,000 lump sum with no accounting required. How is it treated for tax purposes?

    Answer: Taxable wages, subject to income tax and FICA withholding

    A lump sum without substantiation falls under a nonaccountable plan and is fully taxable wages, reported on Form W-2.

  2. Which statement best describes tax equalization for an international assignee?

    Answer: The employee pays a hypothetical home-country tax, and the employer pays the actual home and host taxes

    Under equalization the employee's tax stays the same as if they had stayed home: a hypothetical tax is withheld, and the employer covers the actual liabilities.

  3. How does tax protection differ from tax equalization?

    Answer: Under tax protection the employee keeps any windfall if host taxes are lower

    Tax protection reimburses only the excess of actual taxes over home-country taxes, so the employee keeps the benefit when host taxes are lower.

  4. Under the physical presence test for the Foreign Earned Income Exclusion, how long must a U.S. citizen be in a foreign country?

    Answer: At least 330 full days during any 12 consecutive months

    The physical presence test requires 330 full days in foreign countries during a period of 12 consecutive months.

  5. What is the main purpose of a Certificate of Coverage issued under a U.S. Social Security totalization agreement?

    Answer: It proves the assignee stays covered by home-country social security and avoids double contributions

    A Certificate of Coverage shows that the worker stays in the home country's social security system, so contributions in the host country are not required.

  6. A relocation policy offers more generous home-sale help to younger employees than to older ones. What is the main legal risk?

    Answer: Age discrimination under the ADEA

    Giving benefits that disadvantage employees 40 and over can violate the Age Discrimination in Employment Act.

  7. A temporary work assignment is realistically expected to last more than one year. How does the IRS treat employer-paid travel and lodging?

    Answer: Taxable, because the assignment is considered indefinite

    Assignments realistically expected to last more than one year are indefinite, so the new location becomes the tax home and reimbursed living costs are taxable.