Michigan State University
Controller's Office

Administration Bldg
426 Auditorium Rd, Rm 305
East Lansing, MI 48824
517 355-5020

SECTION 53: Moving Expenses

Last reviewed: October 2017

Last updated: October 2017

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).  Payment for moving expenses is not an entitlement; in all cases, it is an option to be agreed upon between the unit administrator(s) and the prospective faculty/staff member.

II. Amount

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

III. Payment

There are two methods of paying moving expenses to employees: A) Providing a taxable Moving Expense Allowance (preferred method), or B) Reimbursing expenses paid by the employee. Only one method may be used to pay an employee for a move. Departments cannot provide a fixed allowance, and also reimburse expenses.

For a new employee, employment forms must be completed (i.e. the employee’s job must be in the HR/Payroll system) before moving expenses can be paid.

  1. Providing an employee with Moving Expense Allowance is the preferred and least complex method of payment. There are no receipts to turn in or tax determinations to make. It entails simply agreeing on an amount to provide and using one of the Payroll forms below to make payment. Per IRS regulations, the entire moving expense allowance will be reported as taxable income and included on the employee’s W-2 statement at the end of the year. Applicable taxes will be withheld and reported.
    1. For faculty and academic staff, complete an Additional Payment Form (Exhibit 55-J) to process the Moving Expense Allowance payment. Attach the offer letter or agreement supporting the allowance amount.
    2. For support staff, complete a Special Payment Authorization Form (Exhibit 55-I) to process the Moving Expense Allowance payment. Attach the offer letter or agreement supporting the allowance amount.
  2. An alternative, and more complex form of payment is providing a Moving Expense Reimbursement. Follow the steps below to process this form of payment
    1. Review the information available from Purchasing about contracts MSU maintains for Moving Services,
    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 Disbursement Voucher (use Payment Reason O) and/or Additional Payments Form, must be approved by the Payroll Division before reimbursements are processed.  When using a Disbursement Voucher, the completed Employee Moving Expense Information Form must be imaged and attached to the e-doc. The Disbursement Voucher will be routed for Approval to Payroll for you – no special routing by the initiator or Fiscal Officer is necessary. The Payroll Department is provided with notice by University Services 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 5.a., or they do not meet the three qualifying conditions listed under item 5.b., the expense payments do not qualify as non-taxable moving expense payments and must be paid as described in item 7.

    6. Request for payment of non-taxable moving expenses may be made to University Services through a Requisition for preferred vendors or by Disbursement 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 Disbursement Voucher.  The reason for the payment should be designated as "moving expenses for an employee" and should include specific information  about the move. (Moving expenses for employee, 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 Services contract release when payment is made directly to a moving/storage company (see Moving Services). 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 Disbursement Voucher.

        If the payment is made directly to the moving company as a University Services contract release, the unit must contact University Services for assistance.  University Services can facilitate contract compliance between the vendor, the unit and the individual. University Services 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 Disbursement 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 Disbursement Voucher; receipts must be submitted.
        2. Alternatively, car expenses can be reimbursed at the rate of  $0.17 per mile driven, plus tolls.  The mileage driven, as well as the origination and destination, must be documented.
        3. The differential from MSU's mileage per diem can be submitted as "taxable moving expense" on an Additional Payments Form (see item 7 below). The differential is equal to $0.36.
        4. Payment of expenses for any trip in excess of the one trip limitation must be processed through the Payroll Department as described in item 7 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 7 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 5 and should also be reported on the Employee Moving Expense Information form 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 and detail regarding the reimbursement must be provided.
      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 Office, Hannah Administration Building, 426 Auditorium Road Rm. 350.  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. After passing review, the payment to the employee will be issued with the next scheduled salary payroll.

IV. Foreign Moving Expenses

Consult the Payroll Division.

V. Exhibits/Forms