ACP: Career Counseling

Residents & Fellows

Moving

by Patrick C. Alguire, MD, FACP
Director, Education and Career Development, ACP

Moving van

Many employers will pay for moving expenses as a benefit for joining their medical group. Even if this is the case, you still may be able to claim an income tax deduction, depending on how you were reimbursed for the move. Some concerns about moving remain operative whether or not your employer pays for the move. The following paragraphs highlight some important tips to get the most out of your move with the least amount of trouble and expense.

Buyer Beware: Moving and storage companies are one of the most troublesome businesses reported to the Council of Better Business Bureaus. One of the reasons is the lack of enforcement of federal and state regulations. The Department of Transportation (DOT) regulates the moving and storage industry, but this merely entails issue a license based upon their driving record, and not upon their business record. Prior to just a few years ago, the Interstate Commerce Commission regulated the moving and storage industry, but this responsibility has been transferred to DOT, which simply does not have the capability of enforcing existing regulations. Furthermore, DOT does not license local movers, this being a prerogative of the state, and some local movers are completely unlicensed. Your local Better Business Bureau (BBB) probably has a record of complaints against movers, which might be helpful in identifying the worst offenders, and there is a national BBB (http://www.bbb.org) web site that might be worthwhile to contact if contemplating a move using a moving company.

Get it in Writing: Since deregulation of the moving industry, charges for interstate moves may vary by $6,000. In order to get an accurate idea of the cost; obtain at least three estimates. But beware of the lowest bid. It is not uncommon for a moving company to bid low in order to get your business, then ask for more money when they arrive on moving day. Typically, these movers will claim that "unloading fees" were not included in the bid, or that you had "hidden possessions" that were not taken into account in the estimate. Always get your estimate and the service it covers in writing.

Get What in Writing? There are three types of moving estimates: binding, nonbinding, and not-to-exceed. As the name implies, the binding estimate ensures that you'll not pay more than the estimate regardless of weight or distance. Some companies charge a fee for a binding estimate. A nonbinding estimate may vary according to actual weight and distance traveled, sometimes up to 10% of the given estimate. The not-to-exceed estimate means that you pay no more than a specified amount, but it could be less. This might be useful if you are planning to sell or leave behind many large items and expect the total load of your move to decrease.

Know About the Extras: Ask specifically if the estimate represents the total cost of the move, and make a written notation about all extras covered, or not covered in the fee. An unpleasant surprise at the end of the move is to learn that packing material, extra charges for climbing stairs, or extra "carry charges" from the truck to the home were not included in the original estimate. Understand, for example, that most movers do not unpack, but simply deliver the boxes to the designated rooms in the new home. An unpacking service can be purchased, but this only means the boxes will be unpacked and the contents left standing in the room; the contents are not "put away" into the proper cupboards, closets, or shelves. Finally, there is often a separate fee to carry away the boxes and packing material once they are done "unpacking." Although it will never be in a written contract, movers expect tips when they have finished unloading. Get an idea from the company what a reasonable tip might be for the work to be done; don't rely on the workers for this information.

Insurance: Broken or lost possessions are the biggest complaints against movers. Interstate movers are liable for only 60 cents per pound of damaged, lost or stolen goods, and some local movers pay even less. Movers do provide extra insurance for an additional cost. There is the Full Replacement Value where you receive the amount you originally paid for the time, and Depreciated Value where the goods are valued at their present day value. Full Replacement Value insurance costs about 85 cents for each $100 of declared value, whereas Depreciated Value insurance runs about 25 cents per $100. Taking a large deductible, for example $1000, can keep insurance prices down. Most movers will not insure items against damage that you have packed yourself, but in this situation, at least make sure the mover is liable for lost or stolen goods. The best insurance deal may be to check with your homeowner's agent. Many homeowner policies include "transit" coverage that will protect you for lost and stolen goods, and you can often add coverage for breakage and damage that will be cheaper than the movers policy, and probably more reliable if you are forced to collect.

Saving Money: Summer is the busiest time for moving, and rates are often higher at this time. Some movers offer breaks for moves after Labor Day, or weekday pick up and deliveries. They are not likely to come forward with this information, so be sure to ask. Movers sell boxes and tape, but if you are willing to pack in used boxes, they will often give these to you free of charge, and this can save you several hundred dollars alone. Some movers will supply packing tape, and since the average move uses 15 rolls of tape, at $5.00 a roll, this can quickly add up.

Tax Deduction: You may take the cost of moving as a tax deduction provided you pass two IRS tests. The first test is the 50-mile test. That means the distance between your new primary job and your former home must be at least 50 miles greater than your previous commute to work. The second test requires that you be employed full time in the general area of your new job location for at least 39 weeks during the 12 months after you make the move. The deduction covers the cost of packing and shipping, insurance, and up to 30 days of storage, the cost of traveling to your new home, lodging while traveling, but not meals, and the cost of disconnecting the utilities at your old home and hookups at your new home. Use IRS form 3903 or 3903F to claim your deductions.

Moving Paid For? You new employer may pay for your move in one of two ways, a tax-free reimbursement for amounts you could have deducted yourself, or by adding the reimbursement cost of your move to your salary. If you receive a tax-free reimbursement, you have no further financial responsibilities. The cost of the move will show up as a miscellaneous nontaxable item on your W-2 form, and you will not need to fill out any extra tax forms. If your employer added the cost of the move to your salary as a reimbursement, then you need to fill out IRS form 3903 to get your deduction; otherwise you will be paying income tax on the moving costs.

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