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Employee Moving Expense

Policy Number BUS-005
Effective Date September 11, 2010
Responsible Office/Person Board of Trustees
Related Policies
Additional History
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UNIVERSITY OF MASSACHUSETTS DARTMOUTH

AUDIT PROTOCOLS POLICY

 

Employee Moving Expense

To enable the University of Massachusetts Dartmouth to be competitive in the employment market and to be able to attract and retain a competent work force, it may be necessary to defray an employee's moving expenses. Relocation is becoming increasingly common. Policies that help ease the employee's financial and personal problems of relocation and transfer are both a business necessity and a morale booster.
The Dartmouth Campus may provide reimbursement for the sum of actual, allowed moving expenditures when accompanied by adequate accounting and documentation. Reimbursement is allowed up to the maximum individual reimbursement rates or the maximum aggregate moving expense reimbursements limit as prescribed in this policy. All moving expense reimbursements shall comply with the terms and conditions of the University of Massachusetts Dartmouth Moving Expense Reimbursement Policy as prescribed herein.


Eligibility and Authorization
The Chancellor, Vice Chancellors and Deans are authorized to decide whether to offer moving expenses on a case-by-case basis up to the limits set forth in this policy.
Moving Expense Reimbursement Policy and employment contract addendum must accompany all employment offers where the University is agreeing to provide moving support.  Moving expense reimbursement is limited to faculty and non-unit employees.
When officially hired but prior to incurring any moving expenses, the new employee and the Vice Chancellor for Administrative and Fiscal Services shall sign Relocation and Moving Expense Agreement stating the terms and conditions associated with receipt of any moving expense reimbursement. The signed agreement must be on file in the Office of Human Resources.  A copy of this signed agreement shall be forwarded to the Controller.
The maximum aggregate moving expense reimbursement shall not exceed 10% of the employee's base salary or $15,000, whichever is less. However, the Chancellor, Vice Chancellors and Deans have the authority to set a lower limit.
If a newly hired employee voluntarily resigns before fulfilling the required period of employment as stated in the Relocation and Moving Expense Agreement pursuant to this policy, the employee is liable to repay the University on a prorated basis. Repayment amounts shall be prorated as follows:
If resignation is-
· Within one (1) year of the official beginning date of employment, the employee shall be required to pay back all (100%) of the reimbursed moving expenses.
· More than one (1) year but less than two (2) years from the official date of employment, the employee shall be required to pay back that portion of the reimbursed moving expenses that exceeds $5,000.
· More than two (2) years but less than three (3) years from the official date of employment, the employee shall be required to pay back that portion of the reimbursed moving expenses that exceeds $10,000.

Moving Expense Payments - The Campus Controller is responsible to ensure that all moving expenses paid by the University are either paid through the Human Resources system or are promptly reported to the Campus Payroll Office. A "Moving Expense Tax Form" must be prepared whenever the University reimburses an employee or pays a third party on the employee's behalf. To be acceptable a form must include the 50-mile test (see below) and group moving expenses into the categories referred to below. (See "Moving Expense Tax Form"). The Campus Payroll Office is responsible for payroll tax reporting and withholding on moving expense payments.

Tax Reporting and Withholding - Moving expense payments made by the University must be separated into the accurate category to ensure proper tax reporting and withholding. The categories as outlined below are Nonqualified Expenses, Qualified Expenses paid to Employees or Qualified Expenses paid to Third Parties.

1. Nonqualified Moving Expenses: Nonqualified moving expenses are payments by the University for temporary living costs, house hunting, the costs of selling an old residence or buying a new one, the costs of meals consumed while traveling, the costs of breaking an old lease, etc. Whether the employee is reimbursed or the payment goes directly to a third party, these payments must be reported as federal wages in Box 1 of Form W-2 and are subject to income tax withholding and Medicare taxes.
2.
Qualified Moving Expenses: Qualified moving expenses are the costs of transporting an employee who meets three requirements (outlined below) his family, and his household goods and personal effects from his old residence to his new residence.
3. Qualified Moving Expenses Paid to Employees: These payments are not taxable income to the employee, are not included in Box 1 of Form W-2, and are not subject to income tax withholding or Medicare taxes. They are reported in Box 12 of Form W-2 and are identified with code P.
4. Qualified Moving Expenses Paid to Third Parties: Qualified moving expenses paid directly to third parties (e.g., to a moving company) are not reported anywhere on the Form W-2.

Three Requirements an employee must meet for expenses to be considered Qualified Moving Expenses - Each of the following requirements must be satisfied before classifying an expense as "Qualified".
1. The 50-Mile Test- No moving expenses can be excluded from the employee's income unless the employee's new work site is at least 50 miles farther from his former residence than his old work-site was from his old residence.
2. The Time Test - During the 12 months immediately following the employee's arrival in the new location, the employee is employed full time for at least 39 weeks.
3. Move is closely related to the start of work - The employee's move must be closely related, both in time (generally within 12 months to start date) and place (generally the distance from the employee's new home to the new job location should not be greater than the distance from the employee's former home to the new job location), to the start of work at the new job location.

Allowable Automobile Mileage Rate -The rate as of July 1, 2008 is 27 cents per mile. Each year's standard rate can be found in IRS Publication 521, Moving Expenses. Employees may choose to move their household goods, personal effects and family members themselves using their own or rented modes of conveyance, as follows:
a. The University may reimburse rental charges, which include mileage rates charged by the rental company for truck rental, towing dolly or other rental conveyance, plus fuel costs for the rental vehicle for employees to move their own household goods, personal belongings and privately owned vehicle(s).
b. The University may reimburse the employee up to a $100 maximum for personal property insurance premium to insure household goods. The University will not reimburse the employee for personal liability insurance premiums.
Storage Including Warehouse Handling and Delivery
New employees are strongly encouraged to make arrangements for housing prior to the arrival of household goods at the new location. However, if under unusual circumstances prior housing cannot be arranged, the University may reimburse the following expenses:

a. Storage of household goods up to a maximum of thirty (30) consecutive days after the items are moved from the former residence and before they are delivered to the new residence.
b. The University may reimburse delivery and handling charges for the stored household goods and personal belongings; however, total storage, handling and delivery charges shall not exceed $800, and are applied to the maximum aggregate moving expense reimbursement.

Appendix A: IRS Taxable/Nontaxable Moving Expenses for examples of Qualified and Non-qualified moving reimbursements.
Allowable reimbursements by the University may have tax consequences for the employee. Table A1 details allowable reimbursements that the IRS considers qualified and non-qualified real estate relocation expenses. This list is not necessarily all-inclusive and is intended solely as a reference. For further information, consult the IRS moving reimbursement regulations (IRS Publication 521 or 523).
Employees are encouraged to consult with a personal tax professional for advice on the tax implications of any moving reimbursements.
Table A1. Examples of Qualified and Non-qualified Moving Reimbursements


Qualified
(Non-taxable; deductible by employee)‡

Non-Qualified
(Taxable or non-deductible by employee)†

Travel-only during actual move from former to new location.

Travel-during any trips other than the actual move, such as house hunting.

Lodging-only during actual move from former to new location.

Lodging-during any trips other than the actual move, such as  house hunting.

Household goods

Meals with original receipts

Packing charges

 

Personal property insurance

 

Appliance Services

 

Extra labor

 

Truck rental or other rental conveyance

 

Mobile home moves

 

NOTES:

  • The total dollars of "Qualified Moving Expenses" reimbursed directly to the employee must be included on the employee's W-2 form in box thirteen (13) as Code P. 
  • The total dollars of "Nonqualified Moving Expenses" will be processed through the payroll system as taxable compensation, with applicable taxes withheld and corresponding employer benefits paid.

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