Michigan State University
Controller's Office

305 Administration Bldg
East Lansing, MI 48824
517 355-5020

SECTION 53: Moving Expenses

Last updated: December 2004
  1. Eligibility
  2. Amount
  3. Payment
  4. Foreign Moving Expenses
  5. Exhibits/Forms

I. Eligibility

Faculty (at the rank of instructor and above), academic, professional, and executive management staff who are either new or reassigned and are moving from outside a radius of 50 miles to the MSU work location.  The move will meet the IRS distance test if the new job location of the employee is at least 50 miles farther from the former home than the prior job location was from the former home.  For example, if the former job location was 3 miles from the former home, the new job location must be at least 53 miles from that former home.  The distance test only considers the location of the former home and does not take into consideration the location of the new home (See IRS Publication 521 for additional information).  Reimbursement for actual moving expenses is not an entitlement; in all cases, it is an option to be agreed between the unit administrator(s) and the prospective faculty/staff member.

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II. Amount

Up to $10,000 with the recommendation and approval of the dean.  Amounts exceeding $10,000 must be approved by the Provost (or designate) or the Vice President for Finance and Operations (or designate).  An MAU or unit may establish a more restrictive moving expense policy and may limit moving expenses as deemed appropriate.

Prior to agreeing on any dollar amount of expenses for moving household and personal items to be paid to or on behalf of an employee, units are encouraged to contact University Stores to obtain information on the "Preferred Moving Van Line Contracts".  Generally, one bid is sufficient for interstate moves, while 2-3 bids should suffice for an intrastate move.  The moving company selected is normally the lowest bidder acceptable to both the new employee and to the unit.    Departments can choose from (3) preferred suppliers with competitively bid university discount schedules.  If none of the preferred vendors services a particular area, University Stores will assist the employee or department in obtaining competitive bids from the local area.  Contact University Stores at Relocation/Moving Service Contracts.

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III. Payment

  1. For a new employee, payroll forms must be completed before moving expenses can be reimbursed to that employee.  This includes providing the Payroll Division with a completed Form W-4 and a copy of the employee's social security card. (More detailed payroll procedures are provided in Section 55 of this Manual.)
  2. The Payroll Division will review all moving expenses (taxable and non-taxable) prior to reimbursement.  The Employee Moving Expense Information (see exhibit 53-A), along with a Reimbursement Voucher and/or Additional Payments Form, must be approved by the Payroll Division before reimbursements are processed.  The Payroll Division is provided with notice by University Stores of vendor payment information as services are provided to the employee or on behalf of the university department.
  3. Departments are required to fill out the form, "Employee Moving Expense Information."  If reimbursements are submitted incrementally, an amended Employee Moving Expense Information form must accompany and show cumulative figures to date for each subsequent reimbursement request.  Departments are responsible for ensuring that the total amount submitted for moving expense does not exceed the negotiated amount and that the proper approval is obtained for amounts exceeding $10,000.
  4. The correct method for paying moving expenses depends upon the nature of the expenses. The method used for a particular expense is determined by the Internal Revenue Service (IRS) classification of the expense payment as either "non-taxable" or "taxable".
  5. Determination of Non-Taxable Moving Expense Payments:
    1. Non-taxable moving expense payments are specifically identified by the IRS as employer payments of the following:
      1. Expenses limited to moving household goods and personal items, and expenses of storing and insuring household and personal effects for a single consecutive 30-day period, and/or
      2. Expenses limited to transportation and lodging (not including meals) while traveling from the former home to the new home in the most direct route (including the day of arrival).
    2. In addition to what is outlined in the preceding categories, non-taxable moving expense payments must also meet the following conditions:
      1. The new MSU work location is at least 50 miles from the individual's former home.
      2. The expenses are incurred within one year from the date the individual begins work and are properly submitted for reimbursement.  Moving expense information should be submitted within 30 days of being incurred to facilitate prompt reimbursement.
      3. The new employee's employment relationship with MSU must be full time at the new MSU work location and the department must expect the employment relationship to last a minimum of 39 weeks during the 12 months immediately following the move.

    If the moving expenses either do not fall into the two categories listed under item E.1., or they do not meet the three qualifying conditions listed under item E.2., the expense payments do not qualify as non-taxable moving expense payments and must be paid as described in item G.

  6. Payment of non-taxable moving expenses may be made by University Stores for the preferred vendors or by Reimbursement Voucher, as appropriate.  This information should be reported on the form, "Employee Moving Expense Information".  Documentation (e.g. invoices, paid receipts, tickets) typically required for voucher payments should be submitted with the Reimbursement Voucher.  These payments must be charged against a General Fund supplies and services account or other appropriate non-General Fund account.  The reason for the payment should be designated as "moving expenses for an employee" and should include specific information  about the move, i.e. “Moving expenses for Dr Doolittle, his spouse and 2 children from Los Angeles, CA to East Lansing.”
    1. Expenses limited to moving household goods and personal items and storage or insuring household and personal effects for a single 30-day period may be paid as a University Stores contract release when payment is made directly to a moving/storage company. However, if the new employee pays the expenses (expenses limited to moving household goods and personal items or storage), the employee may be reimbursed on a Reimbursement Voucher.

      If the payment is made directly to the moving company as a University Stores contract release, the unit must contact University Stores for assistance.  University Stores can facilitate contract compliance between the vendor, the unit and the individual. University Stores can also assist with any disputes.  If the individual chooses to negotiate and contract with the moving company, they are responsible for paying the moving company invoice and submitting a request for reimbursement by completing a Reimbursement Voucher.  In the event a dispute arises between the moving company and the employee, responsibility for resolving the matter rests with the employee.

    2. Expenses limited to transportation and lodging (not including meals) while traveling from the former home to the new home may be paid.  Expenses are limited to a single, one way trip for both the new employee and each household member.
      1. If transportation is by car, actual expenses (e.g. gas, oil, tolls) may be reimbursed by using a Reimbursement Voucher; receipts must be submitted.
      2. Alternatively, car expenses can be reimbursed (using a Reimbursement Voucher) at the rate of  $0.19 per mile driven, plus tolls prior to July 1, 2008 or $0.27 per mile driven, plus tolls beginning July 1, 2008 and after.  The total mileage driven, as well as the origination and destination, must be documented on the voucher.

        The differential from MSU's mileage per diem can be submitted as "taxable moving expense" on an Additional Payments Form (see item G below). The differential is equal to $0.31.

      3. Payment of expenses for any trip in excess of the one trip limitation must be processed through the Payroll Division as described in item G below.
    3. Meal expenses, limited to meal per diem amounts, ARE NOT included in the definition of non-taxable moving expense payments.  If the department has agreed to reimburse meal per diems while traveling from the former home to the new home, such amounts must be included on an Additional Payments Form as described in item G below.
    4. In accordance with current IRS regulations, "non-taxable" moving expense payments paid directly to the employee must be noted on Form W-2 (Box 12, Code P); however, these expenses are not reported as wages and are not subject to income tax withholding.
  7. Taxable moving expense payments are payments of expenses other than those listed in item E and should also be reported on the form "Employee Moving Expense Information" and processed as follows:
    1. Payment to the employee for expenses that do not meet the definition of non-taxable moving expense must be handled on a reimbursement basis.  Reimbursement to the employee for these expenses must be paid on an Additional Payments Form as a lump-sum payment.  The earnings type "MOV" should be used for all taxable moving expense reimbursements and the "comments" section should provide detail regarding the reimbursement.
    2. Taxable moving expenses will be subject to withholding of income tax and FICA/Medicare tax, and will be reported on the employee's Form W-2. Withholdings for federal, state, and FICA tax will approximate 40%.
    3. These expenses should be charged to a General Fund salary or labor account or other appropriate non-General Fund account.
    4. The Additional Payments Form is to be submitted to the Payroll Division, 350 Administration Building.  Original receipts and documentation for reimbursements submitted on the payment form must be maintained by the department and copies must be attached to the Additional Payments Form.
    5. The payment to the employee will be issued with the next scheduled salary payroll.
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IV. Foreign Moving Expenses

Consult the Payroll Division.

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V. Exhibits/Forms

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