Faculty and Staff Moving
Reimbursement for moving expenses now taxable income.
With the enactment of the Tax Cuts and Jobs Act of 2017, reimbursement of moving expenses for new faculty and staff for moves that occur after January 1, 2018 will now be treated as wages and subject to federal and state tax withholding. Please also note that employees may not deduct moving expenses on their individual income tax returns. This means that all future moving expense reimbursement offers through 2026 should be processed and paid as extra compensation through the HR Transaction system under the category of “Employment Agreement – Transition and Relocation”.
Current moving expense reimbursement commitments which have not yet been paid:
- If the move occurred in 2017 reimbursement must be processed through Accounts Payable before April 30, 2018 and will not be taxable to the employee. Although the change in the tax law allows for tax-free reimbursement to occur until June 30, 2018, Accounts Payable needs time to process and review the transactions.
- If the move occurred in 2018 the reimbursement can still be processed through Accounts Payable, however, the employee will experience imputed income on their next payroll check, which will include appropriate payroll tax withholding. Departments may choose to process the reimbursement as a special compensation payment instead of reimbursing actual expenses through Accounts Payable. In this case, it is the discretion of the department if they choose to gross up the payment offered by 35% to account for the resulting payroll taxes.
Future moving expense reimbursement commitments:
- Departments may continue to utilize the existing university policies as a guide for determining the amount of moving reimbursement to offer. The employing unit may consider moving and additional expenses in determining an amount for relocation. These will continue to be specified in the offer letter.
- Future moving expense reimbursements must be paid through the HR Transaction system as special compensation; no prior approval is required. Departments may choose to reimburse actual expenses or offer a lump sum payment for relocation expenses. If the Department reimburses actual expenses, they will be responsible for collecting and reviewing receipts.
University Human Resources is working with campus partners to update university policy and web resources to provide you with additional guidance on this subject. Questions may be directed to firstname.lastname@example.org and will help us in identifying the additional resources that may be needed.