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4 min readSo you’ve just landed a new job (congrats!), and your employer is footing the bill for your long-distance move to a new city, state, or even country. But if you’re wondering what that actually means, don’t worry—we’ll walk you through the typical employee relocation assistance package, discuss employer costs, and break down international relocation.
Keep reading to learn more about what to expect from an employer-paid move.
If an employer is paying for your move, they will offer what is called a “relocation package” to assist you in your move. Services commonly offered in relocation packages can include:
Employees receive these relocation packages in a few different ways. The first is via lump sum—which means the employee will receive a pre-fixed amount of money to pay for all travel expenses. The second option is reimbursement, where the employee foots the bill initially, and then their employer pays them back once the move is completed.
Sometimes, an employer will partner with a professional mover to handle all their employee relocations. This method is also referred to as direct billing, meaning the moving company will bill your employer directly.
Keep in mind that some employers offer “tiered relocation packages,” or packages based on how long you’ve been with the company, and individual or family circumstances. These packages can have a combination of the services mentioned above.
By paying close attention to what is included in your relocation package, you can determine if there’s an opportunity to negotiate services. For example, you could identify services that you need that aren’t included, like help with packing or towing a vehicle. If you’re upfront with your employer, there’s a greater chance they’ll be able to customize your relocation.
Employee relocation isn’t cheap, and if your employer is footing the bill for your entire move, you could be saving thousands. In fact, the average cost to employers for renters’ relocation packages is between $21,327 and $24,913. And it’s even higher for homeowners, costing between $61,622 and $79,429.[1]
It is no wonder, then, why employers will sometimes include a payback (or repayment) clause in their benefits packages!
Yes, most employer-paid moves are taxable, or considered “taxable income” by the IRS and local authorities. This encompasses all funds given to employees for relocation assistance, especially household goods transportation, living expenses, lump sum payments, and more—which would be included on top of an employee’s taxable income for the year.
In order to offset the cost of income tax, some employers will either deduct the taxable portion of the funds given for relocation assistance in advance, or they will pay the on your behalf so you don’t have to. Always make sure to confirm with your employer so you know whether or not you’ll owe any money to the IRS come tax season.
Data as of post date. Offers and availability may vary by location and are subject to change. Pricing data collected by requesting estimates from top moving container companies for four home sizes across six distances.
*Based on a 3-bedroom across-country move.
Because international moving can be so expensive, employers will usually work with a third-party professional moving company to coordinate the logistics of your move. More often than not, your employer will pay for all relocation expenses directly. This means you won’t have to pay out of pocket for services like household goods relocation, foreign moving expenses, and international moving services—because your employer will coordinate them with the moving company in advance.
Things your employer probably won’t be able to help you with? Here are few tasks you might have to tackle on your own:
These aspects of an international move are crucial to helping you acclimate to a new country but may include added expenses that your employer won’t be covering. So make sure you keep these in mind and communicate with your employer about your specific needs.
Absolutely, but how the military handles them is vastly different from corporate (or civilian) employee relocations. If the military reassigns you (domestically or internationally), they will put you into contact with a local professional moving company that is already contracted with your military agency. That company will assist you with the logistics of moving your belongings, while your military agency will assist you with the required documentation.
Getting hired for a new job in a new place can be an exciting chapter in your life. And understanding exactly what services are a part of your relocation package and which qualified moving expenses your employer will cover will reduce the stress of moving to a new city or country, allowing you to focus on the things you need to settle into your new home.
Relocation reimbursement is different from a relocation bonus in that it covers most (or all) of an employee’s moving expenses in the form of a lump sum, reimbursement, or direct billing. A signing bonus (or relocation bonus) is offered to an employee as incentive to relocate and/or to offset the cost of living expenses in the new location. The IRS considers both taxable income, however.
Companies will spend on average between $70K-$100K for relocation packages covering current and newly hired employees who are homeowners and $18K-$25K for current and newly hired employees who rent, according to popular corporate relocation companies like ARC and CapRelo.
You can report moving expenses paid by your employer as taxable income when you file your taxes for the previous year. If you had relocation expenses that exceeded the amount you received (or were reimbursed), you may be eligible for moving expense deductions.
Yes, an employer can pay for relocation expenses, but they don’t have to! Companies will sometimes offer to pay for moving expenses via a “relocation package”—which could be given to an employee in the form of a lump sum payment, reimbursed at the end of the move, or handled directly by their chosen moving company.
Expense reimbursements are exactly what they sound like: moving costs that are able to be reimbursed by an employer at the end of a move. The employer usually requires initial approval of the estimate, but will eventually repay the employee for all qualified moving expenses once the move has been completed.
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