Employee Relocation

Relocation expenses are defined as the reasonable costs incurred by a new employee, or by a current employee who transfers to a new University location, for moving household goods and personal effects. Relocation expenses also include the cost of travel to the University location for the individual and his or her immediate family. These costs can be reimbursed when supported by invoices and receipts.

Submitting Relocation Expense Reimbursement Requests

G-13 Policy describes the rules and procedures governing moving and relocation.

Relocation expense reimbursement requests are submitted using a Travel Expense Voucher (TEV) after the final move concludes. All official travel must be properly authorized, reported and reimbursed in accordance with UC Policy.

The expenses must be listed in detail, supported by original receipts or equivalent electronic receipts that contain the same level of detail as an acceptable paper receipt, and approved by the employee’s department head or other authorized official.

The University may pay the cost of transporting the household goods and personal effects of a new appointee or employee directly to a common carrier or household mover. The individual, however, must use a common carrier from the University’s preferred vendor list. Such payments must be requisitioned using a purchase order.

Allowable Relocation Expenses

Actual and necessary moving expenses are eligible for reimbursement, including the following:

  • The cost of packing, crating, transporting, unpacking and uncrating the appointee’s household goods and personal effects.
  • Actual and reasonable expenses related to insurance for the household goods while in transit, if incurred within any 30-day period after removal of the household goods and effects from the former primary residence
  • Actual and reasonable expenses related to moving two personal motor vehicles per household (which may include motorcycles but excludes the vehicles listed below). The vehicles may be shipped or driven. If the appointee decides to drive his or her personal vehicle, he or she will be reimbursed at the mileage rate published in G-28, Appendix A
  • Actual travel expenses for the individual and his or her immediate family, but not to exceed the cost of air coach transportation. If the appointee claims meal costs en route, those costs must be reimbursed in accordance with G-28

The following costs are not reimbursable:

  • Assembly and disassembly of unusual items such as swing sets, swimming pools, satellite dishes, hot tubs, and storage sheds
  • Animals (except household pets consisting of domesticated animals normally kept or permitted in a residence) or the cots associated with kenneling of pets
  • Motorized recreational vehicles, including boats, kayaks, canoes, airplanes, camping vehicles, snow machines and jet skis
  • Canned, frozen or bulk foodstuffs
  • Building supplies, farm equipment, and firewood
  • Plants

All moves of the employee and members of his or her household should be completed within one year of the date an appointee first reports to the new job, even if his or her appointment date was effective prior to the report date.

Tax Treatment of Relocation Expenses

Moving expenses fall into one of two categories: taxable and non-taxable. The majority of payments such as household move, airfare, etc will be paid to a third party according to the University policy and are non-taxable. Incidental expenses such as lodging and mileage (final move) are considered to be out-of-pocket expenses and are non-taxable.

Non-taxable

The University will pay directly for most moving expenses including household goods, personal effects and car shipment to minimize the traveler’s out-of-pocket costs and income tax reporting for the employees in connection with non-taxable expenses

Payment Made to Taxability Tax Reporting

Third –party vendor

Non-taxable

Not required

Incidentals paid directly to employee

Non-taxable

Reported information on W2

Taxable

Non-excludable expenses must be included in the employee’s gross income such as house hunting trips, temporary housing and meals. The UCSF Payroll Office deducts the appropriate tax percentage from the employee’s federal and state tax and the remainder appears on the employee’s monthly or biweekly paycheck. The gross amount of the payment and withholdings will be included on the W2 in the year in which payment is made.

Relocation Expense Definitions

Terms Definitions

Employee

Prospective employee or appointee

Members of Household

IRS Section 1.217-2(b)(10) defines “members of household” as other individuals who are members of the taxpayer’s household, and who have the taxpayer’s former residence and the taxpayer’s new residence as their principal place of abode. A member of the taxpayer’s household is any individual, including domestic partner, residing at the taxpayer’s residence who is neither a tenant nor an employee of the taxpayer.

Household Goods and Personal Effects

Household goods and personal effects include furniture, clothing, household appliances and other items that are usual and necessary for the maintenance of a household.

Freight Costs

Freight costs include the total charges for transporting household effects from the point of origin to the point of destination. Freight costs also include associated charges such as packing containers, labor and insurance of household and personal effects.

Moving and Transferring Expenses

Moving and transferring expenses are defined as the reasonable costs of moving household goods and personal effects to a new residence. These include the cost of travel to the university location for the prospective employee and his or her immediate family.

Reasonable Costs

Reasonable costs are costs that are considered to be reasonable under the circumstances of a particular move such as travel from the old to the new residence made via a conventional mode of transportation using the shortest and most direct route available and in the shortest period of time normally required to travel the distance.

Nontaxable Reimbursement Amounts

Nontaxable reimbursement is a reimbursement of moving expenses that is not included in the employee’s gross income. The amount is recorded on the employee’s W-2 form as a fringe benefit that is excluded from taxation such as:

  • Packing, crating and transporting of household goods and personal effects
  • Insurance and in-transit storage charges
  • Travel and lodging expenses associated with the final move to the new residence for employee and members of employee’s household

Taxable Reimbursement Amounts

Reimbursement for relocation expenses incurred that must be included in an employee’s gross income and are therefore taxable.

The following expenses are taxable:

  • Pre-move house hunting expenses such as travel, meals, car rentals, lodging, etc once an offer has been accepted
  • Temporary lodging (new work location) for up to 30 days and meals for up to 30 days of residence in the temporary lodging if it does not have cooking facilities
  • Meals associated with the final move to the new residence
  • Mileage reimbursements in excess of the rate published in G-28, Appendix A

Resources

References