Moving Expense

  • Guided by UNM Business Policy 4020, and IRS requirements.
  • We must report to new employees for whom moving expenses are paid or reimbursed
    • Via W-2 form, whether “taxable” or not
    • This is to ensure the IRS is aware of all such expenses paid on behalf of employee, to prevent employee deducting the expenses on their tax return (“double-dipping”)
  • Certain moving expenses, such as meals and house-hunting expenses, can be reimbursed, but must be taxed, as these reimbursements do not meet the IRS definition of “Deductible Moving Expenses”.  See IRS Publication 521 for additional information. 
  • Due to the information that must be collected by Payroll for subsequent reporting on the employee’s W-2, reimbursements for moving expenses will not be made until after the employee’s employment start date
    • This includes reimbursement of pre-move house-hunting expenses
    • This should be communicated to all new employees with whom an agreement has been made to reimburse for moving expenses
    • For the “timeliness” aspect of being reimbursed under an Accountable Plan, requests for reimbursement of moving expenses or pre-move house-hunting expenses will be considered timely if the reimbursement paperwork is received in the appropriate Financial Services accounting offices NO MORE THAN 60 days after the employee’s employment start date, even if the actual expense was incurred greater than 60 days ago; or when the expense was incurred, whichever is later.
    • For example, Faculty John Doe’s start date is July 1, 2012.  All moving type expenses must be submitted no later than August 30, 2012 in order to have qualified moving expenses reported as non-taxable.
    • If Faculty John Doe’s moving expenses are incurred on August 3, Financial Services must receive the reimbursement request no later than October 2 in order to have qualified moving expense reported as non-taxable.
    • Reasons for this from a Payroll perspective:
      • IRS requires applicable taxes to be withheld as soon after the taxable event as possible
        • FICA and Medicare cannot be withheld if employee isn’t in the system, as there are no wages from which to withhold
      • Additional Payroll concerns:
        • Moving expense reimbursements should be processed as soon after the employee start date as possible; tax reporting in a subsequent year is very problematic
  • ALL reimbursements made under UNM Business policy 4020 that do not qualify as Deductible Moving Expenses per IRS guidelines will be considered taxable wages.
    • Appropriate taxes will be withheld from the next paycheck after the reimbursement
    • For moving expenses, this includes, but is not limited to:
      • ALL pre-move house-hunting expenses
      • ALL meals paid for or reimbursed
      • Return trips to the former residence
      • ALL payments for lodging after the first night of relocation
      • Storage in excess of 30 days
      • Mileage in excess of current allowable IRS rate for moving expenses
      • Any expenses not accounted for within a reasonable period of time (60 days)
The IRS also limits moving expenses to cost incurred within one year from the date that the employee first reported to work in the new location.