Taxable Move/Relocation Expenses
Find out about taxable move and relocation expenses.
Note
Please be aware that ALL move/relocation expenses and reimbursements are taxable to the new employee. Due to Payroll reporting deadlines, claims for employee moves, or trips including taxable payments/ reimbursements must be fully approved within the same calendar year in which the employee is taxed. If the expense report is submitted but not approved by late October/early November (specific deadline will be announced in the coming months) the expense report will be held and processed for payment in January 2025.Expenses for an employee move/relocation may be eligible for payment or reimbursement by UC San Diego. NOTE: Move/Relocation expenses are taxable, according to IRS regulations.
Reminder: Not all employees are eligible to be reimbursed for expenses listed here. Refer to Reimbursable Move/Relocation Expenses for Staff to learn about allowable expenses.
Moving Expenses: Reasonable expenditures for transporting the appointee, members of their household, household goods and personal effects from their former primary residence to their new primary residence.
Relocation Expenses: Reasonable expenditures other than moving expenses incurred in the process of relocating the appointee and members of the appointee's household to the location of the appointee’s new appointment (e.g. house hunting trips, return trips to the employee’s former residence, etc.).
Move/Relocations Paid in 2018 or Later
Taxability for Moving Expenses
Moving expenses that are reimbursable to certain titles are subject to applicable Federal and FICA taxes.
The Tax Cuts and Jobs Act (P.L. 115-97) signed into law impacts the taxability of moving expense payments and reimbursements provided by an employer. Any expense or amount paid for moving expenses, whether or not they are paid directly to an employee, on or after January 1, 2018 are includible in an employee's gross income subject to applicable federal income tax withholding, social security and Medicare taxes.
Note: State of California has yet to determine if state income taxes will also apply.
- Once Travel & Expense approves/processes the move claim (i.e. expense report), Payroll is notified of the taxable expenses and will report the imputed income to UCPath.
- Employees will see the taxable move payment/reimbursement amount added to their gross income and applicable payroll tax deductions, including Federal withholding and FICA taxes.
- To reduce financial burden, Payroll may be able to distribute the reportable amount over a number of pay periods in the tax year (excluding December), subject to review and payroll deadlines.
- Send an email to Payroll for pay-related guidance and consideration. The email will generate a Services & Support case.
- Departments will see an FBT DOS entry (Fringe Benefit-Taxable earn payments made through Travel) on the Chart of Accounts (COA) charged for the employer-related taxes.
Taxability for Relocation Expenses
Relocation expenses that are reimbursable to certain titles are subject to applicable Federal, State, and FICA taxes.
- Employees will see the move payment/ reimbursement amount added to their gross income and applicable State and Federal withholding, and FICA taxes.
- To reduce financial burden, Payroll may be able to distribute the reportable amount over a number of pay periods in the tax year (excluding December), subject to review and payroll deadlines. Send an email to Payroll for pay-related guidance and consideration. The email will generate a Services & Support case.
- Departments will see a MVE EARN Code entry (taxable Moving Expense payments made through Travel) on the Concur Chart of Accounts (COA) charged for the employer-related taxes.
Note: If an employee receives reimbursement for an exceptional expense, it is taxable.
Move/Transfers Paid in 2017 or Earlier
Moving expenses that are taxable and reimbursable to certain titles include:
- Any expense that fails an IRS requirement, such as:
- The expense must be in connection with beginning work at a new job location and incurred within one year from the time the appointee/employee first reports to the new job.
- During the 12 months immediately following the move, the appointee/employee must be employed full-time for at least 39 weeks.
- The distance between an appointee's/employee's new job location and former principal residence must be at least 50 miles more than the distance between the individual's previous work location and former principle residence.
- Pre-move house hunting, including:
- Travel
- Meals
- Lodging
- Meals and lodging while occupying temporary quarters in the San Diego area
- Meals associated with the final move to the new residence
- Expenses associated with the new locations such as:
- Automobile registration
- Driver's license fees
- Refitting of carpets and draperies
- Connecting utilities
- Mileage reimbursement in excess of the current rate
- Rental automobile cost incurred while the primary auto is being shipped to the new location
- Storage charges, except those incurred in transit and for foreign moves
- Return trip to your former residence
- Breaking a lease
- Mortgage penalties
- Disconnecting utilities
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Note: If you received reimbursement for an expense that is not tax deductible, it is taxable.
Moving expenses that are taxable but NOT reimbursable include:
- Qualified residence sale, purchase, and lease expenses, including:
- Home improvements
- Real estate taxes
- Security deposits
- Loss on the sale of a home
- Any part of the purchase price of a new home or other costs associated with its acquisition
- Real estate taxes
- Assembly/disassembly of unusual items, such as swing sets, pools, satellite dishes, or storage sheds
- Animals (except for household pets normally kept or permitted in a residence) or the cost of kenneling pets
- Motorized recreational vehicles, including water, snow, camping, or air (e.g., boats, canoes, airplanes, and jet skis)
- Canned, frozen, or bulk foodstuff
- Building supplies, farm equipment, and firewood
- Plants
Tax withholding, amounts paid for taxable moving expenses, whether or not they are paid directly to an employee, are includible in an employee's gross income, subject to withholding of applicable income, social security, and Medicare taxes. Please note, the dept. will see a MV2 DOS entry (taxable move payments made through Travel) on the Concur Chart of Accounts (COA) charged for the employer-related taxes.
Though the nontaxable moving expenses are excludable from the employee's gross income, the IRS requires that the University report such expenses on the employee's Form W-2.