Any lawyers out there

[luprisi]

I got a new job and I would have to relocate to another state, now they will pay me a moving allowance in the amount of $5,000 upon signing of the contract. I have some questions though, Read the next paragrah,


Employer shall pay employee a moving allowance in the amount of $5,000 upon the signing of this contract. Employee shall document to Employer actual moving expenses for federal tax purposes prior to year end.

Does that means that if I spend less than $5,000, they will not give the $5000, but the actual amount that I spent??

I am debating between driving my car and my husband's. I wanted to drive to save some money, but if they will pay me only what I spen, it does'nt make any sense. I might as well send it so I can get my money back

What do you think?

 

[dbelden1]

I'm not a lawyer, but I went through a relocation 2 years ago, and will be going through this same thing shortly as I am negotiating a possible relocation and the new office is also in another state... I believe the premise of the moving allowance is that you get the $5k up front and you will use that money to move. It has been my experience, and things could have changed, but they consider the difference of what you receive as an allowance vs. what you have spent as income... make sense? for example... you get the $5K, but it only costs you a total of $3K to move, the $3K is considered an expense, and you would be taxed federal income tax on the difference, or the $2K because it is money to you and would be considered a bonus/income and therefore taxable. I believe it will have something to do with how the company will recognize the expense on their tax returns as well, and for this reason they will ask you to submit receipts for what you spent. Some companies use this method vs. paying a 3rd party to negotiate moving packages. They have more control on how much is spent and know the total financial impact to their bottom line right up front.

I would just clarify with your employer making the offer. They did not say "up to" so I would say that you should get the entire $5K to spend as you see fit, and taxed on the rest, but if you go over, you are on your own for that. The HR department should have an easy answer to this question. It definately will not hurt to ask for a clarification before you sign!

please correct me if I have said anything inaccurate, however, this has been my experience.

Good Luck & let us know what happens!

HTH's some

 

[petramom]

I'm a lawyer, although I don't do employment contracts. It's written kind of ambiguously, although it sounds more like they're paying $5K than they'll reimburse actual expenses up to $5K. I don't know what the tax language is about - maybe they pay taxes differently on the amount that is spent on actual moving expenses and the remaining amount is considered salary. I'm afraid the only way you'll know for sure is to ask them.

 

[JoanC]

I'm a CPA not a lawyer. But tax wise anything that is not spent on moving is taxable to you. I would assume you get to keep all 5000, but if you only spend 1000 then 4000 would show as taxable on w-2.

 

[luprisi]

Thanks!!

I appreciate all your input. I see now, so if I spend 3500 then I will be taxed on the remaining 1500. That makes sense, but they get to deduct the 3500 as company expenses. The thing is that at this point, I'm broke, so I wanted to make sure that all the money spent will be paid back

Thanks to you all

 

[dbelden1]

I appreciate all your input. I see now, so if I spend 3500 then I will be taxed on the remaining 1500. That makes sense, but they get to deduct the 3500 as company expenses. The thing is that at this point, I'm broke, so I wanted to make sure that all the money spent will be paid back

Thanks to you all

I would also assume that you would get this money up front BEFORE the move, in a lump sum, so you actually do not have to put any of your own money out for the move... if that is not clarified in the offer letter/contract, ask if that can be put in with the negotiation... Especially if you are transferring with the same company to a different office, it should be a relatively easy thing for HR and payroll to drop into your paycheck if this is the case before your move date! otherwise be sure to factor in any credit card fees or other hidden charges using your own money!


ETA: sorry, just saw that this is a new position... guess the money up front might be a bit harder, but you could ask if it is a possibility if it is a financial hardship to pay it yourself and get reimbursed... just a thought...

Congrats on the new job!

 

[luprisi]

I would also assume that you would get this money up front BEFORE the move, in a lump sum, so you actually do not have to put any of your own money out for the move... if that is not clarified in the offer letter/contract, ask if that can be put in with the negotiation... Especially if you are transferring with the same company to a different office, it should be a relatively easy thing for HR and payroll to drop into your paycheck if this is the case before your move date! otherwise be sure to factor in any credit card fees or other hidden charges using your own money!

Actually, it says upon signing of this contract (which I did already), but this a new job, I am not transferring. Now my concern is that I just finished school and although my situation will change when I start working, right now it's kinda hard, because moving companies require money up front. I do not think that they will give me the money up front, since they require documentation for my actual moving expenses. I am so shy, that I do not dare asking them. NOW, after I provide all the documents if I don't see it in my first payroll, my shyness will go away for sure