Responsible University Officer(s):
- Associate Vice President and Controller
- Director of Purchasing Services
Deans or equivalent administrative officers may approve payment for relocation expenses for faculty, professional and administrative staff appointed on a full time basis for a period of at least one academic year, and for other University employees as determined by the dean or equivalent administrative officer. The dean or equivalent administrative officer must authorize the payment and method of payment prior to relocation.
Relocation expenses being paid or reimbursed should not exceed one month's salary or a "not to exceed" amount agreed upon by the dean or equivalent administrative officer.
Employees will be taxed on all relocation expenses whether reimbursed or paid on their behalf. (See Tax Cuts and Job Act, Sec. 1405)
The Tax Cuts and Job Act eliminates deduction for qualified (non-taxable) relocation expenses effective January 1, 2018. All relocation expenses, whether previously deductible or not, are now taxable to employees if reimbursed or paid on their behalf.
- Moving expenses, if incurred prior to January 1, 2018 and where the reimbursement is issued by February 28, 2018, may be claimed as taxable or non-taxable, depending on the type of expenses (qualified or non-qualified) per the previous tax law.
Departments have two options for paying for employee relocation costs. The options are:
- Offer a lump sum for relocation expenses - recommended method as it imposes the least administrative burden on the University.
- Reimburse for actual and substantiated moving expenses
If funding to pay for the relocation is coming from sponsored research sources, Sponsored Projects Administration (SPA) may require additional approvals to ensure allowability of these costs to the sponsored project.
REASON FOR POLICY
To ensure that the University pays for, or reimburses, relocation expenses for employees where this benefit would serve as a significant recruiting tool, to allow departments and employees the flexibility to choose the method of handling relocation expenses, and to ensure departments communicate tax implications to employees and comply with state and federal tax laws.
|Primary Contact||Mary Everleyfirstname.lastname@example.org|
|General Questions & Special Situations||Purchasing Services Travel Services Coordinatoremail@example.com|
|Tax Questions||Payroll Services/ HR Call Centerfirstname.lastname@example.org|
|Policy/Procedure Questions||Purchasing Servicesemail@example.com|
|Relocation Assistance Program||Director of Relocation Assistance Program (Human Resources)||firstname.lastname@example.org|
- Relocation expenses
- Expenses for transporting personal, household or business belongings, negotiated as part of recruiting an employee for the University of Minnesota. Includes such services as packing, loading, hauling, insuring, temporary storage, etc.
- Relocation expenses may also include transportation, lodging, and meals for the employee and family en route to the University. Transportation may not exceed coach class air fare by the most direct or least expensive route for the employee, spouse, and dependent children, or the current mileage rate. Expenses may also include travel and expenses for trips necessary to secure living quarters and/or temporary living expenses at the employment location. Reimbursement may not exceed University travel guidelines.
- Non-taxable (Qualified) Relocation Expenses (incurred in 2017 and reimbursed by 2/28/2018)
- The reasonable cost of moving household goods and personal effects from former to new residence, which are not considered to be taxable income to the employee. Includes such services as packing, loading, hauling, insuring, temporary storage, etc. See Appendices.
- Non-taxable (Qualified) Travel Expenses (incurred in 2017 and reimbursed by 2/28/2018)
- The reasonable cost of travel, including lodging but not meals, during the period when moving from former to new residence for the new employee and members of the new employee’s household, which are not considered to be taxable income to the employee. See Appendices.
- Taxable (Non-Qualified) Relocation Expenses
- Expenses, that, if paid directly or reimbursed by the University, represent taxable income to the employee and will be reported on form W-2 subject to appropriate payroll tax withholding. See Appendices.
- Dean or equivalent
- Approve lump sum payment or reimbursement of moving expenses.
- Request advance approval from Dean or equivalent. Inform the employee that they will receive a lump sum (if applicable) or that the moving expenses will be reimbursed and the limitations on such payments.
- If moving expenses will be reimbursed, inform the employee to retain original receipts. Inform the employee that the IRS requires the University to report the reimbursement of nonqualified relocation expenses as taxable income subject to the appropriate tax withholding.
- Prepare a Moving Expense Form after the move. Ensure that expenses claimed for reimbursement are within the limits of current policy.
- Human Resources
- Provide orientation information to new employees.
- If being reimbursed actual and substantiated relocation expenses, retain original relocation expense receipts.
- Purchasing Services
- Maintain policy and procedures. Negotiate moving contracts. Communicate policy information.
- Payroll Services
- Capture information for IRS reporting.
- January 2018 - The Tax Cuts and Job Act eliminates deduction for qualified (non-taxable) relocation expense effective January 1, 2018. All relocation expenses, whether previously deductible or not, are now taxable to the employees if reimbursed or paid on their behalf.
- January 2011 - Comprehensive Review: Change to policy to reduce administrative processing costs by offering and promoting a lump sum payment; clarifies potential tax implications to new employees. 30 Day Review.
- January 2010 - Updated Policy Statement language to show that Dean or equivalent officer may approve and must authorize relocation payments.
- July 2008 - Policy and procedure updated to reflect rollout of Enterprise Financial System.
- January 2006: Modified the Moving Expense Reimbursement Form (BA 1357) to be consistent with the IRS 2006 rulings.
- January 2005: Modified the Moving Expense Reimbursement Form (BA 1357) to change the Qualified Mileage Reimbursement & Excess Mileage Reimbursements rates to be consistent with IRS 2005 rulings.
- July 1997: Modified the Moving Expense Reimbursement Form (BA 1357) to clearly distinguish taxable and nontaxable moving expenses. Updated payroll address in BA 1357.
- November 1996 - Modified policy statement to state that payment of moving expenses is not limited to 1 month's salary.
- Was part of the Employee Business Related Expenses Policy
- December 1995