Did your dream job make an offer? It’s everything you want it to be – except it’s in another city, state, or even country altogether. Around 11% of all job seekers in 2018 relocated.
The next person to make the big move could be you!
Relocation for work is a serious business. In addition to the obvious advantages of the new position, there are social, professional and tax ramifications tied to relocating for a job. It can be exciting as well as stressful.
If you are making an international move or simply changing cities, moving for work opens up new opportunities to build networks, make new relationships and expand your experience.
Read on to learn more about the job relocation process and taxes.
You Have a Job Offer, But…
It is contingent on relocation for work. The company is even offering a generous $2,500 to help you move. Is this good? Is it enough? Where do you even start?
Or what if you are offered a position and the company isn’t offering a relocation package? Is it possible to counter offer and get the company to reimburse you for some of the expenses? Which ones?
We asked some of the leading HR professionals and a leading employee relocation company for their expert advice. It may surprise you, but there is no legal obligation for employers to reimburse or provide moving expenses for employees.
Relocation for Work – Things to Consider.
A typical executive relocation may include a dedicated employee or service to assist in all the details of a move. Entry-level employees might be offered a lump-sum or no package at all.
As you negotiate your move, consider asking for reimbursement of some of these costs. This list is not comprehensive but will give you a good place to begin your negotiations.
Finding a Place to Live.
The costs of buying a new home and selling your old home are typically part of executive level relocation packages. This includes expenses like closing costs, real estate commissions, and other miscellaneous fees associated with buying or selling a house.
In high cost-of-living areas or moves abroad, the company may elect to offer assistance in finding and placing a deposit on a suitable rental. Many companies will offer a trip including transportation and hotel to the new location to search for a suitable home.
A common perk is to provide an allowance for interim housing in the form of an extended stay hotel or furnished rental flat for a fixed time period to facilitate the move.
Family Adjustment Assistance.
When the head of household is relocated, some companies offer job search, school enrollment or other limited adjustment services to your partner or spouse. If moving abroad, language lessons and translation services, assistance in visas, drivers licenses, bank account set up, etc. is invaluable.
Moving Expenses.
Your company may provide transportation by common carrier (plane, train or bus) or reimburse you for use of your automobile for you and your family to leave your old location and move to the new one.
Some fully covered moves include the cost of movers to pack your belongings, load them into a truck or ship and move them to your new home, then unpack them and take away the boxes. Simpler moves might reimburse the cost of packing materials and a truck.
Even if your company does not offer a relocation package, they may be willing to reimburse some of the above costs.
Keep Great Records.
When you are ready to plan your move, get the details of your relocation offer with your employer in writing. This way you are aware of what is specifically covered or reimbursed. Many companies outsource relocation services to a third party.
Other companies choose to pay a fixed sum for relocation and ask you to coordinate everything yourself. Make sure to get specifics. Remember to save all receipts and documentation related to your move.
For tax years prior to 2018, the IRS allowed deduction of your job relocation moving expenses. However, beginning in 2018, the moving expense deduction is available only to certain active duty military personnel. Reimbursements are considered regular taxable income.
If you are lucky enough to take a relocation for work in the states of:
- Arizona
- Arkansas
- California
- Hawaii
- Iowa
- Kentucky
- Maine
- Massachusetts
- Minnesota
- New Jersey
- New York
- Pennsylvania
- South Carolina
- Virginia
Moving expenses are excludable from your state income tax in 2018 and so far into 2019. Pending legislation in some states may eliminate the deduction in conformity with Federal law.
As you negotiate a relocation package, query your company about how they will handle a one-time “gross-up” so that you do not incur an unnecessary tax expense. The change in the tax code makes this one-time salary boost needed.
Don’t Let Taxes Scare You Away From Opportunity.
Relocation for work is an incredible adventure. Whether you accept for personal growth reasons, better job prospects or a higher salary, people relocate for any number of reasons. Embrace the chance to stretch beyond your comfort zone and embrace new experiences.
Moving can be a scary prospect. You might find yourself selling, storing or packing all your belongings. If you aren’t paying someone to perform the task, you will have to do it yourself.
There are lots of expensive variables to consider, especially if you have to worry about buying and selling a house or moving a family. Some companies eliminate variable on their part by shifting the burden of the move to the employee.
Not all companies pay for the travel and moving expenses of their employees, especially the employee is entry level. The moving expenses can quickly add up. Prepare to negotiate by having a clear budget with profit held in your mind.
Relocation is a big decision that most people face at least once in their career. Take advantage of the opportunity! Keep reading this blog to learn more.
