Sometimes getting a new job will require relocating a home and family; unfortunately, moving can be both expensive and time consuming. Thankfully, many companies offer new employees the benefit of a relocation assistance program to help with the transition.
In this article, 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 that requires someone to relocate. Next, we'll talk about the types of costs employers are willing to pay, and the tax laws dealing with moving expenses. Then we'll finish up with a high-level relocation checklist.
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.
If the cost to relocate a home or family is going to present a financial hardship, the 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 an offer of employment.
Moving a home can be an expensive proposition, especially if the real estate market isn't cooperating. Typical costs include:
A general rule of thumb is that it can cost a typical family $25,000 to $75,000 to relocate their home.
Corporations may offer to pay a portion, or all, of an employee's transfer costs. This applies to people that are moving at their company's request, as well as new employees recruited into the organization. Typical expenses paid by large companies include:
If the employee cannot sell their existing home in an established timeframe, 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:
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 or 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 all documentation including receipts and vouchers, competitive bids or quotes, in addition to invoices and bill of lading from the moving company.
If an employer doesn't offer a relocation package, then it may be possible for the employee to deduct the moving expenses on their federal income tax return. To qualify for this deduction, both of the following tests must be satisfied:
Exceptions to the above time test include:
Tax deductible moving expenses include:
Note: IRS rules do not allow for a tax deduction for any of the above moving expenses when reimbursed by the employer for these same expenses. Taxpayers can only deduct costs that were in excess of any reimbursement received from an employer.
We're going to finish this topic with a short, but fairly comprehensive, checklist of items to run through before relocating.
About the Author - Job Relocation Expenses
Copyright © 2010 - 2013 Money-Zine.com