Relocation Information

MAKING THE RIGHT MOVES

Employers may help pay for relocation. It pays to ask. Too often, service members moving into civilian jobs don't ask employers to help pay their relocation costs, says Rebecca Smith, a former Army transportation officer and now a self-employed Internet job search consultant in California's Silicon Valley.

The average cost to relocate a newly hired homeowner is $35,382; a newly hired renter, $9,280, according to 1996 research by the Employee Relocation Council, a Washington-based association of corporations and businesses involved in moving employees.

Yet many military personnel leaving the service neglect even to ask employers to help pay relocation expenses, Smith says.

"First, military personnel are trained to think in terms of receiving orders," especially for relocation, she says. "Secondly, they never ask potential employers because they don't know to ask. Finally, employers never offer information that you don't ask about."

"Employers are caught between wanting to be flexible with employees and keeping costs down, so they will not always offer" to pay relocation expenses, says Diane MacPherson, editor of Relocation & Real Estate News in Newburyport, Mass.

"However, employees who are willing to take the chance to ask may find that the employer is willing to negotiate a package that works for both sides," MacPherson says.

A PLEASANT SURPRISE

In fact, results of the Employee Relocation Council's 1996 New Hire Survey show that 47 percent of the surveyed companies have one relocation program, while the others have two or more, offering various options.

Companies willing to pay relocation costs don't care what rank the new hire held in the military, or how long he or she served.

Just ask Michael Bell, who left the Army as an E-5 in January 1996 and is now a radio test engineer for Ericksson Radio Systems Inc., based in Richardson, Texas.

The company didn't want to wait for the Army to pay for the move from Fort Bragg, N.C., to the company's Hayward, Calif., offices. It picked up most of the bill, including plane tickets, car and household goods shipments, and the cost of almost 60 days' temporary lodging in corporate housing. It also provided a company car so Bell and his wife, Betty, could find a place to live.

"The company took a lot of pressure off us by paying a lot of the relocation costs," Betty says. "They even paid for the storage of our cars and household goods, as well as boarding for our dog, until we could get settled in. We were pleasantly surprised."

Buying a home is expensive. Closing costs, discount points, advertising, realty commissions and house-hunting expenses are just some of the costs. Worse yet, the newcomer may encounter unfamiliar property taxes and higher mortgage payments.

Renters can expect to be socked with their own large expenses, such as breaking a lease to move before it expires, various deposits at a new home and storage bills.

But whether buying, selling or renting, there are ways to reduce relocation costs — if you are well-informed.

FIND ROOM TO BARGAIN

The most important step is to start documenting potential relocation costs at least six months before the move.

Smith suggests making a list of items that you may be able to get reimbursed for — such as travel expenses and shipping household goods — and a separate list of possible additional compensation, such as a cost-of-living allowance and child care reimbursement. These lists will be handy in negotiating an employment contract.

It is equally important to find out what strings the employer's money may carry.

Many companies require employees to repay moving expenses if they leave the company voluntarily within a certain time. Others require employees to stay there for a specified amount of time, regardless of whether they must repay moving expenses. Such agreements have been upheld in court.

In negotiating an employment agreement, use to your advantage the fact that the military will pay to ship your household goods, military transition assistance officials advise. That could be leverage to convince your new employer to pay some other kind of compensation the military does not provide.

For example, if the new company will pay for shipping household goods, offer to forego those payments in exchange for something the company doesn't offer. You could ask for house-hunting expenses, commissions to real estate agents or a promise that the company buy your house from you. It is even fair game to request help with the costs of finding your job.

A TAXING PROPOSITION

As with many other forms of money, there is a price to pay for relocation assistance. The price is taxes: Uncle Sam will want a share of payments or reimbursements you receive for relocation.

Figuring out how much you owe the government, and for what, is very complex.

Anyone who might be relocating should get a copy of IRS Publications No. 521, entitled Moving Expenses, and No. 523, Selling Your Home, according to Arthur Layton, vice president of consulting services at The Hessel Group, a tax expense management company in Wilton, Conn.

The pamphlets, which shed light on some of the murkier aspects of taxation in relocation situations, can be obtained from the IRS by calling (800) TAX-FORM (829-3676) or (800) 829-1040. The latter number also provides instructions on how to download IRS publications on a personal computer.

The IRS also makes tax publications available through its IRS home page.

Two of the areas that often confuse people are taxable versus nontaxable expenses and the concept of "grossing-up."

The federal government cannot levy tax on money an employer pays to you or a vendor to move household goods or store them for up to 30 days, Layton says. Nor can taxes be levied on money spent on the final move, except for meals, he says.

But Uncle Sam can tax reimbursements to the employee, or payments on his or her behalf, for temporary living, house-hunting or real estate expenses, Layton says.

This is where the concept of "grossing-up" comes into play. The employer calculates the amount of tax an employee would have to pay on reimbursement at the time the reimbursement is made, then adds that amount to the employee's salary — hence the term grossing-up — or pays the tax directly. But this perk is optional.

"Grossing-up is an added benefit, not a requirement, and is something you should ask about," Layton advises.

NEGOTIATING TIPS

Do your research. Check the companies' homepages or job search references to find out what the companies you are considering offer in terms of paying relocation costs. But don't bring up salary or benefits until you are offered the job, or you will lose leverage in the negotiation process.

Know how much you are worth, that is, how much in extra benefits a prospective employer is willing to pay for the skills you can bring to a certain job.

Make a list of what you want the most and what you are willing to "give up" in the negotiation process.

When presenting your requests, be prepared to justify each one.

Have everything you and the new employer agreed upon written into the offer letter. It will prevent confusion later.