3 Ways to Control Relocation Costs in the Wake of Tax Reform

Posted by Abby Baumann on Mar 19, 2018 3:48:17 PM

How to Adjust Employee Relocation Policies to Control Costs

Save on Relocation ExpensesAt the end of 2017, Congress passed a new tax law that among other things, slashed the tax excludable status of many employee fringe benefits—effectively making those benefits more expensive. This includes the relocation tax deduction that under the old tax law, made relocation expenses associated with moving for a job, tax excludable. Under the new law, all moving expenses are taxable, and employers would be wise to revisit their relocation policies to see how they can contain relocation spend.

There are a number of different ways employers can do this. Here are 3 ways employers can control relocation expenses in the wake of the 2018 tax reform.

1. Include a Home-Finding Trip in Your Policy

One way to control your company’s relocation expenses is to offer to pay for a home-finding trip in place of other benefits. In the past, many policies offered to cover 3 major benefits: household good moves, final travel, and storage. Under old tax law, all three of these benefits had preferential tax treatment. While household good moves and final destination travel are necessary for almost any move, storage is not always needed. So, some employers have decided to remove storage from their policy, and along with that, any temporary housing benefits. Instead, employers are offering to pay for travel and a few nights at a hotel to find an apartment or house before their employee moves.

By removing these two benefits from the policy and including a home-finding trip instead, it encourages employees to plan ahead as much as possible to ensure they can have their belongings directly delivered to their new apartment or home, and in return employers don’t have to pay for storage or temporary housing.

 

2. Gross Up On Internal Moves Only

While grossing up will always provide relocating employees with the best moving experience, some companies have decided to gross-up the benefits for internal relocations only. This means any new hires would need to cover the tax liability for their move.

It’s important to note that this depends on the situation. If your company actively recruits someone outside of your location, it would provide a flawed experience for that employee to pay the relocation taxes. You would essentially be asking them to pay a fee to work for your company—when you actively sought them out! However, if someone has applied to your company and identified they are willing to move, not grossing up, could be a way to provide them with a relocation benefit while sharing some of the cost with the new employee.

 

3. Provide a Home Sell Benefit

Elimination of relocation tax deductionWhile the relocation tax deduction is no longer applicable under new tax law, there are still tax savings associated with a home sell benefit. Because of this, it may be worth considering adding this benefit to your policy, especially for your higher level moves. In order to control relocation costs, you can reallocate the amount of money typically offered to cover moving, travel or temporary housing, and instead, use that same amount to cover closing costs on an employee’s home sell.. This way, your company (and your employee) can capitalize on the tax savings, while still offering a very competitive relocation benefit.

Conclusion

These are all great ways to control costs without fully sacrificing the employee experience. However, there are many other ways to adjust your company’s relocation policy. Check out UrbanBound’s recorded webinar, How to Control Employee Relocation Costs in the Wake of 2018 Tax Reform, to learn more.

UrbanBound is the smartest and easiest way for employers to manage employee relocation benefits online. Through software and policy guidance, UrbanBound has been helping Fortune 500 companies and fast-growing start-ups offer competitive relocation benefits regardless of their size and budget. Plus, robust reporting tools offer unleveled transparency into relocation program performance. UrbanBound is a tech-driven way to provide a seamless relocation experience for all employees.

request a demo

 

 

 

Topics: Relocation Policy, Relocation Taxes

What a Strong Economy Means for Employee Relocation

Posted by Abby Baumann on Feb 22, 2018 8:00:00 AM

booming-job-market.pngThe Great Recession had huge impact on the relocation industry. Between 2008 and 2010, there was a dip in the number of relocations, and an overall reduction in relocation benefits altogether. In the rarity that a relocation benefit was provided, it was often times given in the form of a lump sum or a small cash allowance. However, all that has changed in the last 5 years, and more specifically in the last year.

In fact, the economy is the strongest it’s been in a very long time—even with the sporadic dips in the stock market. Plus, 2018 tax law reduced the corporate tax rate which could contribute to further economic expansion. With a strong economy, comes a strong job market, and here are some signs of this:

Signs of a Strong Job Market

It’s a great time to be an American worker. However, what does the booming job market mean for American businesses?

As the job market continues to grow, the fight for qualified talent will become increasingly more competitive. And employers will have to get creative in their recruiting efforts. Employers will adapt to candidates rather than asking candidates to adapt to them, and offering employees a relocation benefit is one way companies can adapt to their candidates.

State of Relocation Trends Webinar

How Relocation Benefits Fit into the Growing Economy

As the unemployment rate dwindles, the pool of available talent gets tighter and tighter, and hiring managers have to get realistic. What’s the likelihood that the quantity of talent needed, lives in the city where a company operates?

Despite what some universities or cities will lead one to believe, there’s not one central epicenter for the best candidates—skilled professionals, technicians, and students can be found across the globe. If a company only recruits within their city, state, or country, they are limiting their candidate pool even further!

Branching outside a geographical comfort zone to recruit talent, will ensure that a company will find the right person for the job. What’s more, when a company offers a relocation benefit to all of their relocating employees, from C-Suite executives to campus recruits, it shows candidates that the company values all of its employees, and further distinguishes the company in the fight for top talent.

How Employee Relocation Technology Can Help

A healthy job market requires a strong relocation benefit as one way to distinguish a company as an employer of choice. It shows prospective employees that a company cares about the individual. 

Utilizing technology to power your relocation program creates efficiency that can’t be achieved or replicated by people. Plus, companies don’t need to sacrifice employee experience to achieve efficiency through technology. Many employees today want access to online, self-service tools to manage their relocations. In fact, they often time expect it. Find out how Urbanbound can help distinguish your company and attract top talent.

request a demo

Topics: Relocation, Recruiting

How HR Professionals Can Leverage Company Location to Attract Talent

Posted by Nathan Sykes on Feb 20, 2018 2:26:47 PM

This is a guest post, written by Nathan Sykes, a tech and business blogger for Finding an Outlet.

leverage city to attract talentThe race to attract the best candidates often times has HR professionals asking themselves: “What more can my company offer?

When considering what to add to make an offer letter more attractive, hiring managers and human resource professionals should consider the advantages of their company’s home city or state.

Relocating for a job is a big decision, and not every candidate will consider it. However, some locations are naturally more attractive than others when it comes to convincing a candidate to move. In fact, most candidates will look for a community that offers diversity and culture, recreational activities, affordable living and a mild climate. So what do you do when your city has frigid winters or a high cost of living?

Every city has something special to offer, and many times there are only negative connotations associated with a city due to lack of knowledge. Which is why it is up to HR professionals to educate potential candidates about their company’s city. Here are 5 ways HR professionals can sell candidates on a company’s location.

5 Ways to Sell Your Company’s Location

The Commute: Commuting to work contributes to an employee’s daily stress level. Getting caught in a traffic jam or trying to find parking can greatly increase anxiety. So, if your city has a new public transportation system, or if your office is right off a bus line, be sure to mention this. Additionally, if there are a number of desirable neighborhoods near the office, highlight the potential for a 10-minute commute! Additionally, some companies will subsidize public transit or parking expenses to help further seal the deal.

shorter commute can attract talent

Activities and Culture: Many candidates look favorably on areas that are family-friendly or places that have things to “do.” Be sure to highlight family-friendly activities and culture. Discuss state and city parks, zoos and museums. Focus on proximity to schools and enriching activities for the whole family. Also, don't forget to mention the nightlife for young professionals. Talk about the city’s best restaurants, bars or concert venues. If you are near a major metropolitan area, be sure to mention this as well. If a candidate can’t get all of the things they want from your company’s specific city, it may only be a short drive away.

city culture

Weird City Titles: Is your city the lost luggage capital of the world or was your city voted into a top 23 list for best street food? Focus on what makes your city unique, so candidates get to know the vibe of the city's culture and envision themselves living there


leveraging culture to attract talent

Wellness Opportunities: Many workers, especially young professionals, want to feel good about themselves and their health. Does your city have an acclaimed hospital or an organic grocery store? Does it have wide bike lanes or a community garden? Be sure to leverage anything that could help a candidate see themselves living a healthy lifestyle in your city.

pre-decision services

Offer a Relocation Benefit Package: Moving to a new city is scary, but a company can make the move more attractive by offering employee relocation benefits. This doesn’t mean you have to spend a fortune to help every single hire move. Relocation management software, like UrbanBound, empowers employers to digitally administer relocation benefits from simple educational support to a full-service move.

Conclusion

Not all cities have the same appeal or level of fame, but most people won’t want to move somewhere they know nothing about. Providing education to candidates before they accept the offer is the best way to sell your company’s location. When it comes to attracting talent, focus on how your city is unique, enriches lives and grows professionals into more capable citizens.

request a demo

Topics: Recruiting, Relocation Management Software

Subscribe to the UrbanBound Blog

trends in relocation
Relocation Statistics

Recent Posts

Human Resources Today