Moving for a new job is exciting, but can also be expensive and stressful. Thankfully, most companies understand this and want to help you arrive at your new job relaxed (as can be).. With so many moving options (PODS, white glove services, DIY moves and more), companies also know that packing and moving costs can add up. As such, they’re typically willing to negotiate moving expenses into your employment agreement. But if you’ve never moved specifically for a job, you may not be used to inquiring with employers about how, and if, they cover these costs.
The important time to bring moving expenses into the conversation is during salary negotiations. With relocation assistance, you’re not considering just your annual salary, bonus, and benefits, but also the entire package offered to get you set up in your new job and in your new city. As Jerry McPherson, CPA, CFE of the Mathais Group said, relocation dollars are typically one-time expenses, and sometimes come from different budgets—so companies may be very willing to negotiate a lower-than-expected salary with moving support. “No matter what, remember that companies care about their reputations in recruiting,” McPherson added, “and want to make the offer attractive so you’ll work for them and not a competitor.”
Here are a few tips to consider as you’re discussing the details with your new company.
It’s as simple as that. If a company in another location has recruited you, or you’re negotiating salary, be sure to ask as early as possible in the process about their policy for employee relocation. If you don’t ask, you won’t know. And this isn’t something you want to spring on them at the last minute. Be upfront and clear about your needs.
There’s a lot to think about when planning for and executing a move. But don’t get wrapped up in minutiae when negotiating. Think about the big ticket items you’d need help with: Packing, Moving, Storage—and get quotes in advance. Then give your employer a lump-sum estimate. “It’s preferred by many employers to provide a flat amount for moving expenses versus paying the specifics,” McPherson said. “They’d prefer not to deal with the fine details.” With this lump sum in hand, you can find areas to be more frugal, which may allow you to keep more of the funds in your pocket.
Don’t Forget the Gross Up.
If you receive a lump sum, it will likely show up on your W-2 as salary. You don’t want to find out at the end of the year that the $15,000 you received for moving is actually worth just $10,000. So ask your employer to “gross up” the bonus to cover those taxes. This is where the gross-up comes into play,” said Shannon Nash, CFO/COO of Inside Source, and a CPA who has run HR departments for a number of companies. “The employer is in essence also paying your additional taxes from the added income. The net effect is that the employee pays zero taxes for the covered moving expenses.”
If you are receiving a grossed-up lump sum and moving yourself (whether that’s using your car, PODs or a rental truck), you might need some help unloading items into your new digs. Among our many services, we provide labor only help to get you set up without breaking a sweat after that long drive you’ve made.
Go on a recruiting trip.
If you’re unfamiliar with your new town or city, you might ask for a recruiting trip—airfare, hotel, and spending cash to spend a few days checking out neighborhoods and looking for rentals. This can help you save money and time once you arrive—and will give you a little headspace to think about where you want to live prior to diving into your big new job.
In some cases, an employer may not be able or willing to cover more than the most basic relocation benefit. In that case, it’s important to understand what you can write off on your own taxes.
Go the distance.
To deduct moving related expenses from your taxes, the IRS requires that the move is related to starting a new job; your new location must be at least 50 miles from your old home and job, and you must work at least 39 weeks of the year following your move. This is to prevent people from moving across town—or just across the street—to take advantage of tax-deductible move benefits.
Know what you can deduct.
If you meet the IRS requirements, and your employer is providing no, or minimal, move-related benefits, Nash counsels that you can typically write off the following:
- Reasonable moving expenses such as:
- Mileage (at 17 cents per mile for the 2017 tax year)
- Storage and shipping costs (even for your car)
- Costs for packing up your house or apartment
- Costs connecting and disconnecting utilities
- You typically can’t deduct:
- Meals or any costs related to moving new furniture you buy for your new place.
- Closing costs or other home-sale costs; money lose from breaking a lease, including forfeited security deposits.
Read the fine print.
Employee covered moving expenses typically require some fixed time commitment to keep the full benefit. If you leave your job in less than a year or two, some employers will require a certain prorated repayment. So, if 90 days into your new job, you think about hopping over to a new company, keep in mind that you’ll likely need to write your employer a check on the way out of the door.
Keep your receipts.
No matter where the funds for your move are coming from, document everything you spend. Having an organized paper trail will make reimbursement, or questions about expenditures, easy to complete. And, if you’re claiming deductions come tax time, simple to itemize. Pick up a great mobile scanning app like Shoeboxed to eliminate the hassle of paper, scan and organize receipts into expense reports, and even track mileage.
Miranda is the Marketing Coordinator at Dolly. She’s moved nine times in the past six years, and while she’s grateful for the moving expertise, she’s hoping she doesn’t need to move a tenth time anytime soon.