Relocation Negotiation

Studies show that 70% of companies expect to pick up relocation costs as part of their recruitment expense, they know that your relocation costs will be treated as taxable income, but they often won't say anything about it unless you do. You can remind an employer that you can expect to pay about 30% (or whatever your tax bracket is) of reimbursed relocation expenses in taxes, and that this would place a heavy burden on you financially and your ability to meet living expenses. To ask that the employer assume the personal income tax burdens you incur as a result of your move, is a not-unreasonable request, and is sometimes covered by an employer offering you a “signing bonus” to take care of such expenses, although given its probable use, 'bonus' may not be quite the right word.

Items you can ask the company to pick up or reimburse, and hopefully cover the tax liabilities include:

• House hunting trips before you start.
• Temporary housing costs while you find a suitable permanent residence. Most companies will cover 30 days, sometimes as much as 90 to 120 days.
• Shipping of autos/boats, etc.
• Costs of a professional moving company packing, the shipping and delivery of your household goods.
• Costs of selling and buying a house, if you are a homeowner.
• Job search assistance for a working spouse. Try to get a dollar amount so that you can choose your service provider.
• Help in finding schools for the kids.
• Orientation programs for the new community.

It will help your negotiating position if you can estimate these costs in advance. You can pick up the phone and request estimates or you can visit websites like www.homefair.com and www.homestore.com, which have calculation tools and cost of living comparisons that will help you evaluate how far a dollar will go in the new town in comparison with where you live today. Don't underestimate your relocation costs; there are always surprises and they all cost money. It is one thing to be reimbursed for relocation expenses, but wherever possible you will want the employer to cover you for the tax implications of such re-imbursements.

The costs of relocation are significant and the tax implications often confusing, plus the tax laws change every year. This commentary is intended as a broad brush stoke overview of some of the major issues; it specifically does not represent the advice of qualified tax counsel, and the author strongly recommends you seek such counsel. In the short term, J.K.Lasser's annual Your Income Tax is a usually reliable resource.

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