The Tax Cuts and Jobs Act (TCJA) passed by Congress in December 2017 made all employer-paid or reimbursed moves a taxable benefit to employees. This is effective for all employee moves after December 31, 2017.
With the change in tax law, the Request For Authority to Pay Moving Expenses form is no longer required. The following are options a Department may now follow to direct pay or reimburse employee moving expenses, with the first being strongly preferred.
1. Departments may provide a taxable lump sum relocation payment to incoming employees using the Moving Allowance Request Form. This payment may be made as early as the first employee paycheck and taxed accordingly.
2. Departments may create a requisition, generate a purchase order and direct pay one of the contracted moving companies for the employee’s qualified moving expenses. This activity is coordinated through Procurement Services. Departments must provide copies of the paid receipts to Payroll and Tax Services so that the amount paid can be added to the employee’s paycheck/Form W-2 and taxed. The amount paid for moving expenses will be included in the employee’s taxable income, but no additional funds will be paid out to the employee.
3. Departments may agree to reimburse employees for all or part of their qualified moving expenses. This activity is accomplished through the submission of a payment request form. Departments must report these amounts to Payroll and Tax Services so that the amount reimbursed can add to the employee’s paycheck/Form W-2 and taxed. The amount reimbursed for moving expenses will be included in the employee’s taxable income, but no additional funds will be paid out to the employee.
Departments must contact Payroll and Tax Services to report any moving expenses for 2018 moves that have already occurred.
The contract moving companies may still be used. The current contract has been extended through May 31, 2021.
For more information on allowed direct and reimbursed expenses please visit the Tax Advisor Site.