Policies and Procedures
Policy 1270 – Moving Expenses Reimbursement
December 10, 2010
March 19, 2013
Director of Purchasing Services
Moving expenses for new employees may be reimbursed if the employing department considers the expense necessary to employ a highly qualified and/or highly recruited individual. The payment for moving household and personal goods includes items such as furniture, clothing, and personal effects, and is limited to packing, transporting, and unpacking a maximum of 15,000 pounds. The move must be accomplished within 90 days.
Reason for Policy
The policy is to clarify the regulations for moving expense reimbursement.
Moving expenses are not reimbursable from State funds.
Moving expenses cannot be paid from Sponsored Research funds unless specifically allowed by the granting agency.
- 1270.1 - Reporting Moving Expenses for Reimbursement
Frequently Asked Questions
Q: May the department reimburse a SPA employee for moving expenses?
A: Yes, if the employee has a specialized skill that is necessary to the department’s function.
Q: Does the department reimburse moving mileage at the state mileage rate or the IRS mileage rate?
A: Mileage and subsistence per diems do not apply for moving expenses. Fuel purchased for vehicles must be substantiated by receipts.
Q: May I reimburse the department’s new faculty member for boarding their pets while they are in a hotel waiting for their personal goods to be delivered?
A: No, this is a personal expense.
Q: Why is FICA tax deducted from a moving expense reimbursement when it is reported to Payroll?
A: While the University may reimburse an employee for all moving expenses, the IRS considers some of these expenses to be non-deductible and therefore subject to FICA.
Q: May any fund source be used to pay for moving expenses?
A: Not all fund sources may be used to pay for moving expenses as indicated below.
- Appropriated State Funds and Receipts-Supported State Funds – Moving expenses for new employees may not be paid from State Funds.
- Facilities and Administrative Receipts – Moving expenses may be paid for faculty and research staff only.
- Sponsored Research Awards – Moving expenses for new employees may not be paid unless specified in the contact or grant award.
- Trust Funds (Gifts, Endowment Income, Investment Income) – Moving expenses may be paid as consistent with the fund authority.
- Internal Service Funds (Recharge Centers) – Moving expenses for new employees may not be paid.
- Student and Institutional Auxiliaries and Health Care Clinics – Moving expenses may be paid as consistent with the fund authority.
Q: If an employee is reimbursed for moving expenses and the amounts are included on the employee’s W-2 form, is the full amount taxable?
A: There are several factors that impact the deductibility of moving expenses. The reader should refer to IRS Publication 521 on Moving Expenses for tax guidance. The publication explains the three requirements that must be met for moving expenses to be deductible:
- The move must be closely related to the start of work.
- The move must meet the distance test.
- The move must meet the time test.
IRS Publication 521 provides detailed guidance. In general terms, expenses that are deductible (i.e. “qualified”) include:
- Moving household goods and personal effects.
- Lodging while traveling to the new home.
Expenses that are not deductible (i.e. “non-qualified”) include:
- Meals while traveling to the new home.
- Pre-move house hunting expenses.
- Return trips to the former residence.
Procurement Services provides information on moving expenses to Payroll Services for Form W-2 reporting. IRS Publication 521 indicates the following requirements for W-2 reporting:
- Qualified moving expenses that the University paid to a third party on behalf of the employee (for example, to a moving company) are not reported on Form W-2.
- Qualified moving expense reimbursements paid directly to an employee by the University are reported only in information box 12 of Form W-2 with code P to indicate moving expenses.
- Nonqualified moving expense reimbursements are reported in boxes 1, 3, 5, and 16 of Form W-2 as income. These amounts are subject to income taxes and FICA taxes.
|Moving expense||Purchasing Servicesemail@example.com|
|Moving expense||Disbursement Servicesfirstname.lastname@example.org|
March 19, 2013: Revised response in Frequently Asked Questions regarding moving mileage.
December 10, 2010