Relocation Costs: Refunding versus Upfront (packing, moving company, job, Budget)

[jctx]

We are relocating in June and the company is paying costs up to 10k. If we provide them with 3 (name-brand) moving company estimates, they'll do a direct pay so we dont have to fork it out up front. Aside from this, I inquired about what else can be covered under the relocation funds. We were told we can use the money for amenity hookups, hotels, gas, meals, "etc". When I asked of some other, more specific things, the woman said she would have to check with Corporate Compliance...but she didnt get back to me. Outside of going through Corporate Compliance every time I think of a question for what it can be used for, does anyone have any information on this, or ideas for me?

Truth be told, we would love to just have the 10k in our pockets and roll up our sleeves for the big move. But evidently, there are issues associated with tax write-offs etc for the company, and they cant just hand the funds over. But I also dont want to have to call them every time I want to know if we'll be reimbursed for something or not...Thanks for any help here.

[RikkiTikki]

There are basically two relocation options mentioned in your post – employee reimbursement and lump sum payment.

Back in the day, many companies managed their relocation benefits internally to take advantage of some of the tax considerations you mentioned. The tumbling world economy and shrinking corporate resources caused many employers to scale back overhead operating costs by using their employees to arrange their own moves.

Of the two options, employee reimbursement probably offers the best value because it allows you compare prices and services based on the same uniform requirements needed to move your family. While a lump sum payment may be more attractive to your pocket book, most people underestimate all of the costs associated with a relocation. Frequently they shop for the lowest price and get scammed in the process. They end up paying more – frequently a lot more – than what they budgeted. Or someone involved in the move is injured when they “roll up their sleeves”. Or they manage to destroy something of value like a plasma TV because they didn’t know what they were doing.

Get your three estimates, compare them for value, and see how much of your allocated budget will be spent on the actual move. If you find that you come up short, some companies would consider approval for some additional services.

[jctx]

RikkiTikki, thanks so much for the response. Do you happen to know where we might find information on what else can be expensed so we dont have to keep asking the rep, who in turn has to contact Corporate Compliance for the answer? (that process takes too long for each question we have). I just want to know how we can use that money outside of the actual moving. We are already planning to let them pay for utilities hookups, and possibly a hotel for a couple of nights w/meals. But we're purchasing a home and it sure would be a bonus to be able to get them to cover some of those expenses, such as the inspection, or any closing costs, etc.

[RikkiTikki]

Check with your “rep”, HR department, or hiring manger for a list of services covered under the relocation benefit package they’re offering you. Many employers hire an outside move management company to administer their corporate relocation programs. In today’s economy, these third party companies will usually only want to pay as little at possible to relocate all but highest levels of management or the best and brightest talent.

[jctx]

Alright thanks. The rep/HR consults corporate compliance because they have the scoop on how the tax write-offs work and what is acceptable. I was just hoping there was some kind of list of acceptable tax write-off items where relocation was concerned so we dont miss out on something. Otherwise, we're happy to have them paying the moving company. Thanks again.

[mawipafl]

Corporate relocation - never simple. Each company sets its own "list". Each company either has their HR dept. deal with it or hire a third-party relocation company. Having been-there-done-that, I know what you mean about it taking forever to get answers about specific things!

What you also need to keep in mind, unfortunately, is the IRS. Take for example home inspection and closing costs: if your company gives you funds for that either by reimbursement or lump-sum upfront, those funds become taxable income because the IRS doesn't allow those items as deductible expenses - neither for you as a moving expense nor for your company as a business expense. If your company gives you funds for utility turn off/turn on, then that would be nontaxable income (because the IRS lets you deduct these fees as a legitimate moving expense.)

So, a question you might want to ask your company is what portion of a reimbursement or upfront lump-sum would be given to you as taxable income. That question just might help to get a full list of your company's definitions of what a moving expense is and isn't.

You can check how the IRS defines it all here: http://www.irs.gov/pub/irs-pdf/p521.pdf

[Scott Luther]

Each company is different and they should have a relocation policy. I know you are trying to avoid asking them every time but what most companies do to avoid the many questions (trust me they want to avoid the many phone calls with questions as well) is post their relocation policy on their website or supply it to a candidate for transfer up front. I think what might be the problem is your company doesn't have a policy in writing. I would ask your HR rep if they have a written policy and have him/her send you a copy of that.

To preface, I am in the relocation industry and I consult with companies who transfer employees. So let me try to answer your question what might be covered, or what is usually covered. I have taken one of my clients policies and trimmed it way down to show you an example of what they cover. I have chosen this particular policy because it is very common to most policies I have seen and is very generic. I think this is what you are looking for.


Relocation Summary Covered Items

Temporary Housing
Agreed Length of Time

Real Estate Assistance
Closing Costs, Realtor Fees, Inspections, Appraisals, Loss on Sale, etc.

Household Goods
Transportation including Packing, Unpacking, Crating, Overtime Load/Unload, Storage, Debris Pickup, Valuation, Transporting Automobiles, Appliance - 3rd party, Waiting Time, Extra Pickup/Delivery, Riding Mower, Big Screen TV, Accessorials, Packing Labor, Overtime Packing Labor, Piano/Organ Carry, Carton Delivery, Motorcycle, ATV, Boat, RV, Camper, Bulky Articles

House Hunting/Spousal Trips/Trips Home
Airfare, Employee +1, Lodging, Meals, Rental Car

En Route
Airfare, Lodging/Meals, Mileage



By the way, if you are being directly reimbursed by your company, you shouldn't have too many difficulties with the IRS. In a direct reimbursement situation technically it is the company paying for these services hence you shouldn't be taxed on what they are buying. But be certain it is a direct reimbursement. If not, you will be subject to taxes and it will be put on your W-2 or 1099 in a section of taxable income.

[frogandtoad]

$10K is not much in today's moving world. Will that even cover your moving truck? It did not cover ours. If you expense the moving truck, your airfares (or gas/hotels, etc. if you're driving) you'll probably already be at or beyond $10K, so you won't have to even bother finding out what else they will cover.

Truth be told though, relocation is something you should have negotiated VERY specifically before accepting whatever position you're moving for. What exactly is and is not covered, and should have tried to negotiate that $10K up. At this point, they can say yes or no to anything they want.

[mawipafl]

Excellent info Scott Luther --- corporate relocation can be complicated and you've done a nice job trying to make it as simple as possible to understand.

We've done the corporate relo three times with three different companies, and each was unique, from the bare-bones of covering just the moving company to a full-out covering of absolutely everything.

Thanks for taking the time to compile a list for the OP!

frogandtoad - you're correct that $10,000 in this day-n-age doesn't cover much.

[corpex]

I have taken lump sum in the past two moves with the same company and made money on both. But my lump sum was stricly spending money, the movers/packing etc was all internally paid for. Nice Relo!