Relocating for Your Job: Reimbursements, Tax Deductions, Insurance Riders, and More

Whether you are moving around the corner or across the country, any move is stressful. People often assume that a corporate move is less work and less stress than a move you make on your own. After all, they pay for it and hire the movers, right? Sometimes this is true and sometimes it is not, but even when you are being reimbursed for a move there are many details that you need to handle on your own, not to mention the paperwork to get that reimbursement! Here is some advice and information that I wish we had been given before our moves.

First, decide whether or not this move will really be good for everyone involved. If your relocation is optional, do some research before you make your decision. If your move would be long distance, you need to evaluate the new area to make sure that it has everything that you want in your community. Check housing availability, cost of living, school systems and job opportunities for your spouse if you have one. Cost of living is something that many people do not fully understand. It is not just about salary vs. housing costs. Many things must be factored into cost of living: housing, salary, cost to register/insure your vehicles, taxes, etc. An excellent source of information regarding cost of living calculations is sponsored by Monster.com. You can input the metro areas that you are deciding between and it will give you a breakdown of all living expenses and calculate whether your move would give you a positive or negative change in income. Here is a link to the cost of living calculator: http://salary.monster.com/CostOfLivingWizard/layoutscripts/coll_start.asp

Once you have decided to accept a position that requires relocation make sure that you know upfront exactly what your company covers in terms of moving expenses. This will not only help you to avoid being stuck with an unexpected bill later on, but will also help you to possibly get more than you expect. For example, some companies will pay travel expenses for a "house-hunting trip" before your move takes place. Usually this will cover airfare or other travel for the employee and possibly their spouse as well as hotel expenses for a set number of days so that you can check out the area before you actually move and find the neighborhood that you like and get the process of finding a house started. If you have this opportunity I HIGHLY recommend using it because there is little more stressful than showing up in a new state with no idea of where you will be living. Although some companies make an allowance for temporary housing, it is much easier to have things decided before you actually move. Each company has its own set of rules regarding reimbursement and upfront payment of moving expenses so see if your company has a manual or something in writing that you can read through to confirm their reimbursement policies. This also a good time to find out how long your company's average reimbursement wait is. Do they typically reimburse within 3 days, 3 weeks or 3 months? This will significantly impact your initial moving budget.

Whether your company reimburses for all expenses or not, it is a good idea to keep receipts for all of your travel expenses because you can claim some of them as tax deductions. You must have receipts for everything to claim this tax deduction, so make sure to get receipts even for the smallest expense (tolls paid, gas purchased, etc) as well as big expenses such as hotels. Keep track of the mileage during your trip if you drive because that can also be a tax deduction and/or company reimbursement. Here is a link from the IRS website that will help you to prepare for what expenses will be tax deductible,
http://www.irs.gov/publications/p521/ar01.html.

If you have to travel by car to get to your new home make sure that you follow any rules your company may have about the number of miles you need to travel in a day and a maximum number of days allowed to get to your destination. Most companies have rules like these to make sure that people aren't using their move as a way to visit distant relatives or vacation destinations without paying for lodging. That being said, it is a great idea to use this trip as an opportunity to see some of the country. Even if you are driving through rural areas don't assume there is nothing worth seeing. Often small towns off the interstate will offer something of interest to try to attract people. Don't underestimate the fun of visiting the world's largest rubber band ball (Chevy Chase, MD) or Carhenge (Alliance, NE).

If you are traveling with pets or infants (or both in our case) make sure to check with hotels along the way to see what their pet policy is and whether they have cribs available or if there is space in the room for a portable crib, such as a pack and play. Many hotels do not allow pets (I recommend Red Roof Inns if you are going on an extended trip and have pets. They are reasonably priced, allow pets and we made it 3,000 miles and all our rooms were clean and comfortable.) and some have limited floor space so it is definitely worth checking these things out before you make your reservations. For a listing of hotels that allow pets in the US and Canada check out http://www.petswelcome.com.

Once you have your items out of storage and ready to be delivered to your new home, there is still paperwork to deal with and possible damage to consider. Make sure that you get a copy of your moving companies packing list that tells how many boxes and furniture items were packed. When they deliver your items check off each box and piece of furniture as it arrives carefully so that you notice any missing or broken items right away. Usually you have a short window of time to make any insurance claims. Even with reputable moving companies items are sometimes lost or broken (in the case of our second move we lost almost every piece of furniture except our kitchen table) and you need to be prepared for this possibility. Make sure that you know what kind of insurance rider your company is paying for if they are covering that aspect of the move. If they are not paying for an insurance rider then make sure that you add one. This is too important to risk not having coverage. Just imagine arriving at your new home and finding out that your bed frame is lost, your couch and chair are broken, your bookcases and entertainment center are firewood, your washer is broken, your desk has shelves missing (yes, they really did damage that much stuff) and you didn't get insurance because it was a couple extra bucks. It is definitely a must have. It is also a good idea to double check the values of your furniture and appliances before you move. If you have paperwork on them from when they were purchased that is even better. If items are damaged you will be asked to fill out paperwork listing each item, the damage and both the original cost and either the replacement value or the current value of the item depending on your level of insurance. If you have the option of getting replacement value for your belongings and you have used furniture I would recommend it. We ended up getting back much less than we actually had to spend to replace the items because they gave us the depreciated value of our furniture. Surprisingly enough a couch from 1984 just isn't worth much these days, even though it was a perfectly sturdy (if ugly) piece of furniture before we put it on the moving truck. The more documentation that you have on the value of your items, the better chance that you will get that value back for them.

My last piece of advice is to remember that even if your company is reimbursing you for your moving expenses, the reimbursements will most likely not be exact. Taxes must be taken out of any money paid to you by your employer and this includes moving reimbursements. This may not seem like a big deal, but when you are shelling out $2500 for a moving truck and only getting $2000 back it can seriously cut into your budget if you aren't prepared. If your move is for the government you may be able to get reimbursed for the taxes too, but this will not be able to be processed until after taxes are filed for the year that you moved and it will most likely take a couple of months to actually receive the money even after it is filed.

I hope that this information is helpful to others. Moving is always stressful, but the more information that you have ahead of time, the easier it will be.