Being transferred abroad and given a lump sum of money to arrange the move sounds like a dream come true for many employees. If you've always dreamed of the chance to live and work internationally, this is it – and you won't even lose any money on the moving expenses. Or will you? Negotiating moving expenses with your company can be tricky territory, and it's important to know what you're dealing with and how to make it work for you. Take a look at a few things that you should know about company-provided moving funds.
You May Not Want a Lump Sum
Often, the easiest thing for your company to do is simply cut you a check that you can use to pay your moving expenses yourself. This lump sum can seem like a great deal when you're holding the check in your hands. But don't get too excited. When your company hands you a check for moving expenses, you're responsible for paying taxes on that money, just like you do on your paycheck.
That means that you may not really be getting the amount of money that you think you're getting. It's important to be aware of your tax situation and calculate how much of that lump sum payment you'll actually get to keep. The amount will vary based on your personal tax situation, but you need to know if there will be enough left to realistically cover your move.
If a lump sum is your only option, you should at least request that the amount be "grossed up". That means that your employer increases the amount in an attempt to help cover your tax burden, so the net amount you end up with is enough to make the move. However, there are a couple of other options you may want to try to negotiate for first.
Direct Billing is an Option
For you, the most beneficial arrangement is probably direct billing. This is when, instead of giving any money to you, your company simply buys your plane tickets, pays your movers and freight forwarder, and pays any other moving expenses they've agreed to cover straight out of their own accounts. This way, you get the benefits of your employer's financial assistance without the tax burden of a lump sum payment.
Not all employers are amenable to a direct billing arrangement, however. It's extra work for them, and depending on their money management practices, it may not be a practical arrangement. If your employer shoots down the idea of direct billing, you do have one other option.
Expense the Move
Putting your moving costs on an expense report for reimbursement is probably the most complicated option, and depending on your financial situation, it may not be feasible. But if you can afford to pay your moving costs out of pocket, submit an expense report, and be reimbursed for what you spent, this may be an option for you.
This way, your employer is still technically paying the costs for your move themselves, so the money is not taxable. You will have to report the reimbursement on your taxes, but since it's a reimbursement for a business expense, rather than a payment used for personal expenses, it won't be considered taxable income. And this allows your company to simply reimburse you at the next regular interval when they pay other expenses, rather than making a lot of separate payments for different moving expenses. Beware that this could mean that you'll be waiting awhile for your money, though.
While you may jump at an offer to relocate, don't jump at the first moving expenses package that you're offered without taking some time to consider it and negotiating your best deal. Call an international relocating service by visiting a site like http://www.hollandermoving.com/ for some price estimates so that you have an idea how much money you need and what payment arrangements will work for you.