Relocation Package Questions (Charlotte: sale, mortgage, how much)

[6SigGuruMD]

I have been trying to research relocation packages (aka bonuses) without much success. The info I find online seems lacking for Charlotte…

Is anybody familiar with how a relocation bonus works?
Do I have to sell my current home and buy a new home immediately?
Are the bonuses taxed?
If they are taxed, how much?
And is there any way to avoid taxes?

Any help would be appreciated. Thank you.

[ncopus99]

My relocation amount when I worked in Kansas City was taxed by the government. My company though added that tax so that I would get the full amount. Since I did not do any relocation with a selling of a home and repurchase, I have no clue about your other question.

[stlterp]

Relo agreements are company specific. Some will give you a flat amount, and then you are taxed on that lump sum (+/- 40%) Others will calculate the tax, and gross you up to cover the difference.

Same goes for things like moving expenses, temp housing, closing cost reimbursement, etc...which is considered to be taxable income.

I think there are options that companies use to get around the tax issue on home sale realtor fees, etc. In our case, our house was "bought" by the relo company, which then turned around and "sold" it to the actual buyer.

As far as time frame, it also depends on the company.

[amploud]

Originally Posted by 6SigGuruMD

Do I have to sell my current home and buy a new home immediately?

This depends on the company and the relocation plan administrator. Mine (Cartus) gave me 1 calendar year to buy and sell.

Originally Posted by 6SigGuruMD

Are the bonuses taxed? If they are taxed, how much?

Of course they are taxed! They are taxed just like any other type of bonus. Bonuses are considered income. Not only is the bonus taxed, it also increases your annual income which will likely bump you into higher tax liability! About 40% of my bonus check was deducted for taxes.

Originally Posted by 6SigGuruMD

And is there any way to avoid taxes?

Kinda/sorta/maybe/not really.... IF your company pays taxes on your behalf to cover the relocation package, you may not have a big impact at tax time. This was the case when I relocated. However, the increased income can still bump up your tax liability.

Hope this helps! Good luck!

[newcharlottan]

Each company is different of course but usually a relo package is given to a current employee transferring within his company from one state or another. It is harder to get a new job with a company out of your state and get a relo package. It does happen in the upper echelons of employment.

We used three relo packages with 2 retail companies. They all paid for a company to pack our stuff and moved it, unpack. (AWESOME)

They paid us a lump sum of 3 months living expenses to be used however we wanted. ie deposits, first and last or down payment etc. (we gave them a listing of expenses that were to be incurred)

They paid for the services of a realtor and their commission to sell your home however you were responsible for the mortgage payments.

And yes, the lump sum was taxed as income but what they spent on the realtor and moving expenses were not as the companies/realtor was paid directly to them.