Each month thousands of employees move to a new community, to start a new job. Moves often are more expensive than anticipated. Not only is there the actual expense of moving, but also, for a home-owner, the expenses connected with selling an old home, and buying a new home.
Some corporations may offer to cover some or all of the relocation costs for employees who are moving at the company’s request. Larger companies usually offer a more elaborate relocation package than smaller firms. These benefits become particularly important when there is a large increase in housing costs. For example, an employee leaving a $250,000 four bedroom home in a small midwestern community may find that comparable housing in the Denver Area may cost $400,000 or more.
When interviewing for a job, ask your prospective employer whether or not it has a relocation program, and find out as much as you can about it.
Benefits which may be offered to a relocating employee vary widely. Each situation may call for a different bundle of benefits; analyze your own situation carefully. It is always best to negotiate these matters as part of a transfer package, before accepting the new job, to avoid surprises to either the employee or the company after the move has taken place.
Cost of a familiarization and house-hunting trip for the employee, spouse, and family. (Does your family really want to move here?)
Extra time off (with pay) for traveling and house hunting in the new location.
Moving expenses, including packing and insurance.
What are the dollar limits on moving expenses?
Are there limits on the type of items the company will pay for? Will they move a boat? Exercise equipment? Your car, or second car? Your pets?
Some employers offer a lump-sum payment to cover all expenses of a move. This may cut down the paper work, and encourage you to move more frugally. Ask if the employee gets to keep any money left over.
Travel expenses (lodging, meals, gas, etc.) while traveling to the new location.
Assistance in the sale of your old home:
Company assumes responsibility for monthly payments, taxes and insurance until the old home is sold.
Price guarantee: if sold by the employee, the company will pay the difference between the net selling price and a specified price. (Some companies may pay a “sales bonus” if you sell your home within a fixed period of time, often 60 or 90 days.)
Alternative price guarantee: If you are unable to sell the house within a specified period of time, the company will buy it at a specified price.
Company will pay commissions and other costs of sale.
Assistance in the purchase of a new home:
Company to pay rent of temporary quarters, until a permanent home is located.
Buy down the interest rate.
Company provides low or no interest loans.
A salary level commensurate with any increase in cost of living between the new location and your old location.
Other “one time” payments:
A “signing bonus ” paid to you at the time you start work.
Spousal assistance: Help your spouse find an appropriate job in the new location.
Will you be elgible for any stock options, now or later?
You will want to minimize the tax impact of any benefits you receive. For information on the tax ramifications of your relocation expenses and any reimbursements by your employer, see the IRS Publication 521, Moving Expenses. Brouse on-line or download this publication from the IRS at www.irs.gov/
How hard should you push for relocation expenses? Try to analyze your bargaining position relative to the prospective employer. Does the employer have many options? Are there many qualified local applicants for the same job? Or do you have unique skills unavailable in the local market? Ask youself, “If I owned the company, would I be willing to pay for my relocation?”
If you are considering employment in another country, here are some additional considerations:
Does the proposed employer consider overseas service essential for career development, or will those working in the USA have better career opportunities?
Successful employment overseas often depends upon your proficientcy with a foreign language. How well do you know the language?
Does the employer offer periodic home leave? How often, for how long? What is paid for?
Will the employer pay all costs to return you (and your family and belongings) to your home country, regardless of the circumstances of your departure?
Obtain professional advice regarding taxes, both foreign and US, that you will be required to pay. Americans living abroad may be required to pay AMT (Alternative Minimum Tax) on the same income they’ve already paid stiff foreign taxes on. (Forbes Magazine, 4/1/2002). See Publication 54, Tax guide for US citizens and resident aliens abroad, available at www.irs.gov.
Will the employer provide assistance in finding and paying for suitable housing, as well as appropriate schools for your children?
Some employers hire a relocation services firm to assist you in many details. Find out what they will do for you, as well as what you must do for yourself.
Does your spouse/partner favor the move, or is it considered a personal career sacrifice? Will the empoloyer assist your spouse/partner in finding appropriate local employment, if desired?
If you believe your present employer may terminate you, due to the current economic climate, don’t prematurely discuss any alternative employment you are considering with your employer.
If you are laid off, your present employer may offer you a termination severance package. However, if you quit to accept a new job, you will most probably not receive any termination package. Your best strategy is to keep your relocation plans to yourself until the last minute, lest you lose out on any severance benefit from your present employer.
As a final check-list before accepting a new job in a new community, consider the effects on your over-all career goals:
Does the move represent a true promotion, or a desirable change in direction, or is it only a lateral move?
Is the new location in the “mainstream” of your industry, or are you moving to a “backwater”?
Would you prefer to live in the new location for personal, life-style reasons?
Considering the changes in salary and costs of living, is the move a financial advantage or disadvantage?
The information in this web site is provided for educational purposes. Readers who have legal or tax questions are urged to obtain advice from their attorney or tax professional. While the above material is summarized from sources deemed reliable, it is not guaranteed, and should be independently verified.
Real estate tip:
In this market of rapidly changing inventory of homes for sale, serious buyers need a local agent to watch for new listings which satisfy their requirements. I will be glad to watch for new listings in the areas of your interest. Contact us for further information.
When relocating it is very important to work with a realtor that knows the area. We specialize in Larkspur and Douglas County so we can provide you with information about the Larkspur area including homes for sale, demographics, and schooling. Simply fill out the Contact Us Form and let us know what you are looking for.
We are relocation specialists and as local residents, we love the Larkspur area. Let us show you what we and Larkspur and Douglas County have to offer!
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