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 Sometimes getting a new job will require relocating your home and family. Moving closer to a new job can be expensive and time consuming. Fortunately, many companies offer new employees relocation assistance programs to help with the transition.
In this publication, we're going to cover the topic of job relocation expenses. We'll start by reviewing some of the considerations that should be addressed when negotiating a new job requiring you to move your home. Next, we'll talk about the types of moving costs employers are willing to pay employees, and the tax laws dealing with moving expenses. Then we'll finish up with a high-level relocation checklist.
Moving Expenses
There is no doubt that larger companies have the financial resources to provide assistance to new employees they're recruiting, or existing employees forced to relocate due to internal job transfers. Large companies hire more employees, so the economics of creating relocation programs and packages work in their favor.
That being said, if the cost to relocate your home or family is going to present you with a financial hardship, then moving expenses should be part of the negotiating process. It's easy enough to ask a potential employer if their company has a relocation policy. Even if the answer is "no," it's still possible to negotiate a deal or take this expense into consideration before accepting their offer of employment.
Moving your home can be an expensive proposition, especially if the real estate market isn't cooperating. Typical costs include:
- Selling and buying a home - including closing costs
- Moving furniture and other personal belongings
- Renting a temporary home or apartment while house-hunting for a more permanent home
A general rule of thumb is that it can cost a typical household $25,000 to $75,000 to relocate their home.
Relocation Packages
Corporations may offer to pay a portion, or all, of your relocation costs. This applies to employees that are moving at their company's request, as well as new employees recruited into the organization. Typical moving expenses paid by large companies include:
- Home Sale Services
- Home Purchase Services
- Home Marketing Assistance
- Realtor and Closing Cost Assistance
- Lease Cancelation Fees
- Shipping and Temporary Storage of Personal Belongings and Furniture
- Shipping of Automobiles
- House Hunting Trips
- Temporary Housing / Lodging and Sustenance Expense (such as food)
- Travel and Lodging at Time of Move
- Airfare, Ground Transportation, Mileage Expenses
If the employee cannot sell their homes in an established timeframe, then some companies will offer to purchase the home or provide a "guaranteed" price based on the home's appraised value. Less frequently, companies may offer additional assistance that includes:
- Relocation / Employment Services for Spouses
- Mortgage Counseling
- Higher Cost-of-Living Differentials
- Third-Party Buyout of Homes
- Low Interest / No Interest Loans
- Moving Boats and Motorcycles
- Utility Connections (Turn On Electric and Gas)
Keep in mind that maximum reimbursements may apply. In addition, benefits may be limited to certain timeframes. For example, temporary housing may be provided for only 30 to 60 days. Payments / reimbursements can occur via lump sum advances, checks, debit cards, as well as payments made directly to service providers.
It's also important to retain moving expense documentation including receipts and vouchers, competitive bids / quotes, in addition to invoices and bill of lading from the moving company.
Deductible Moving Expenses
If your employer doesn't offer a relocation package, then you may be able to deduct moving expenses from your federal income taxes. To qualify for this deduction you must satisfy both of the following tests:
- Distance - the new job must be at least 50 miles further from your "old" home than your old job location. If you were unemployed, then the new job must be at least 50 miles from your "old" home.
- Time - you need to work full time for a minimum of 39 weeks during the first 12 months after you arrive at your new job. Self employed persons must work at least 78 weeks in the first 24 months.
Exceptions to the above time test include:
- Job loss due to a disability
- Your employer requests you transfer locations again
- You lose your job / you're terminated (except in cases of misconduct)
Tax deductible moving expenses include:
- Transportation and storage of household goods and personal effects
- Travel and lodging from your old home to your new home (meals are excluded)
Note: You cannot take a tax deduction for any of the above moving expenses if you were reimbursed by your employer for these same expenses. You can only deduct costs that were in excess of any reimbursement received from an employer.
Relocation Checklist
We're going to finish this topic with a short but fairly comprehensive checklist of items you'll need to run through before relocating.
- Moving Services - arrange for transportation of household goods, furniture, automobiles, boats, personal watercraft, and pets.
- Storage Facilities - until you move into a permanent home, you may want to place some of your personal belongings into storage.
- Banks / Financial Institutions - move bank accounts, arrange for new checks, empty any safe deposit boxes.
- Mail - notify the post office of your new address (change of address form), begin notifying family and friends of your new mailing address.
- Documents - assemble student records, medical documents, dental records, veterinarian records, marriage certificates, passports, birth certificates, baptismal records, Social Security cards, Wills, and stock certificates.
- Insurance Policies - notify life, automobile, and homeowner insurance agencies.
- Subscriptions - cancel subscriptions to local newspapers or notify national news and magazines of the new address.
- Clean Up - start the process of determining exactly what items you need to move, what can be sold, thrown out, or given away.
- Local Organizations - resign from volunteer organizations, stop memberships to clubs, gyms and fitness centers, and return books to local libraries.
- Personal Belongings - pick up clothing from dry cleaners, return items borrowed from friends, retrieve items loaned to friends.
- Utilities - notify the electric, natural gas, water, sewer, cable television or any other utility services to disconnect and / or reconnect service.
About the Author - Job Relocation Expenses
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