Overview

Expenses for an employee move/ relocation may be eligible for payment or reimbursement by UC San Diego.  Due to IRS regulations and tax law, such expenses are considered taxable.

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.

Critical Concepts

Tax withholding, amounts paid for taxable moving expenses, whether or not they are paid directly to an employee, are included 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.

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.

• Employees will see the move payment/ reimbursement amount added to their gross income and applicable payroll tax deductions, including Federal withholding and FICA taxes. To reduce the burden, Payroll will generally spread the reporting over the remaining pay periods in the tax year.
• Departments will see an FBT DOS entry (fringe benefit earn payments made through Travel) on the Concur 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 the burden, Payroll will generally spread the reporting over the remaining pay periods in the tax year. 
• Departments 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.

Relocation expenses, when allowable and approved by the authorized authority may include:

• Pre-move house hunting, including travel, meals, and lodging
• Meals and lodging while occupying temporary quarters in the San Diego area
• Meals associated with the final move to the new residence
• Mileage reimbursement in excess of the current rate
• Rental automobile and related costs
• Storage charges, except those incurred in transit and for foreign moves
• Return trip to your former residence
• Breaking a lease
• Mortgage penalties
• Sale of residence costs
• Disconnecting utilities

Note: If an employee receives reimbursement for an exceptional expense, it is taxable.

Move/Relocations 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

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
  
  

Additional Information

Questions? See who to contact for additional guidance.