The information below is provided as a guideline only. You should consult your own tax professional or your institutions legal or tax office to confirm specific institutions, federal, state and local regulations.
Tax implications when relocation expenses are paid directly to a service provider on the employees behalf or reimbursed to an employee
1) Reimbursement Reported as Additional Income - Internal Revenue Service (IRS) requires the institution to report any reimbursement and advances associated with the move that are not in accordance to IRS guidelines as additional compensation income to the employee, subject to payroll taxes.
a) Additional reimbursements and advances if allowed and paid by the institution that must be reported as additional income, include but are not limited to the following:
i) House-hunting expenses
ii) Temporary living expenses
(1) All temporary living expenses are tax reportable, except for the day of departure from the old residence and the day of arrival in the new location
iii) Same-sex domestic partner moving expenses
iv) En route meals
v) Vehicle allowance over IRS approved mileage rate per moving
vi) Storage of household goods over 30 days
vii) Expenses for return trips to the employee's former residence
Further information about tax reporting of moving expenses may be obtained from the IRS website at Publication #521: Moving Expenses click here
2) Reimbursement Not Tax-Reported as Additional Income - Reimbursements and advances of "qualified moving expenses" are not tax reportable as additional income. These reimbursements are reported as information only. IRS guidelines identify the following criteria for "qualified moving expenses".
a) The Job is:
i) A new Job for the person being moved
iii) Expected to last 9 months if a new employee, or 12 months if a relocation an existing employee
iv) At least 50 miles farther from the old residence than the old job was from the old residence
b) Qualified/Deductible Moving Expense includes reasonable costs for:
i) Moving household goods and personal effects. - All or part of the actual and reasonable expenses of moving the household goods of a new employee may be reimbursed
(1) Qualified Moving Expenses:
(a) The actual cost of packing, crating, transporting, unpacking and uncrating household effects
(b) Costs incurred for moves to and from storage
(c) Storage Costs TAX NOTE:
(d) Costs connecting and disconnecting household equipment
(e) "All risk" replacement cost insurance (which should be arranged through the shipping agent or carrier)
(f) Household pets
(g) En route expenses (applicable IRS mileage rate for moving) including lodging but not meals
(h) Storage of household goods for up to 30 days
(2) Non-qualified/Non-deductible Moving Expenses:
(a) Storage charges other than for goods and effects in transit
(b) Costs incurred in the acquisition of property
(c) Costs incurred in the disposition of property
(d) Penalties for breaking leases
(e) Mortgage penalties
(f) Costs of refitting rugs or draperies
(g) Club dues, tuition dues and similar fees that have not expired at the former place of residence
(i) TAX NOTE: Reimbursements received for nondeductible expenses are treated as additional income.
(c) The Individual's whose expenses qualify are:
i) A new employee or current employee transferring to a qualified job
(ii) Members of the employee's household as defined by the IRS (The IRS does not recognize a domestic partner as a member of the employee's household. Therefore reimbursements will be taxable.
3) Moving of laboratories - Moving of laboratory supplies and equipment is a business expense, not subject to IRS reporting.
Complete a Services Request Form or email one of our professionals!
WE EXCEED EXPECTATIONS!
For professional relocation assistance, call 800-759-4253 or 914-241-1711