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Moving Expense Information

Eligibility
Faculty, academic, professional, and executive management staff who are new or reassigned and move to an MSU work location from a distance of 50 miles or more are eligible for reimbursement for actual moving expenses. 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 is not an entitlement, but must be mutually agreed upon between the unit administrator(s) and the prospective faculty/staff member.

Approvals
Moving expenses up to $10,000 require 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.

Estimates/Bids
The prospective faculty/staff member is responsible for submitting bids to department from moving companies for the cost of moving household and personal items. One bid is sufficient for interstate moves; two or three bids are required for intrastate moves.

University Contracts
The University has contracts with various moving companies that provide discounts to the University. Employees may contact University Stores at Relocation Services (http://usd.msu.edu/purchasing/suppliers/moving-relocation.html). It is the employees responsibility for negotiating and contracting with the moving company. Disputes arising between the moving company and employee are the employees responsibility to resolve.

Taxable vs. Non Taxable Moving Expense
Once the department and employee have agreed upon reimbursement of moving expenses, a new employee should note that depending on the nature of the expense, it may be non-taxable or taxable. This may be an important factor as to how an employee chooses to spend their designated amount for moving expenses. For expenditures that are considered taxable by the IRS, the university will be required to report and withhold taxes for the employee. IRS Publication 521 "Moving Expenses" should be referred to for additional information. This publication can be obtained through http://www.irs.gov.

Non-taxable Moving Expense Payments
These payments are specifically identified by the IRS as nontaxable.

  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. Additional storage beyond the 30-day period is a taxable expense.
  2. expenses limited to transportation and lodging for employee and members of household (not including meals) while traveling from the former home to the new home (including the day of arrival). This includes expenses for the day of arrival at the new home and may also include one night of lodging expense in the vicinity of the former home. Additional lodging beyond the one night in the former location, lodging en route to the new home and one night on the day of arrival, is considered a taxable expense.

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 directly from the university to the moving/storage company.

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 individuals former home;
  2. The expenses are incurred within one year from the date the individual begins work and are properly submitted for payment/reimbursement within 30 days of being incurred.
  3. The new employees 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.

    Expenses limited to transportation and lodging (not including meals) while traveling from the former home to the new home, in the most direct route, may be paid. Expenses are limited to one trip for both the new employee and each household member. Payment of expenses for any trip in excess of the one trip limitation is considered taxable income.

If transportation is by car, actual expenses (gas, oil, and tolls) may be reimbursed and receipts must be submitted. Alternatively, car expenses can be reimbursed at the IRS specified rate of $.17 per miles driven, plus tolls. The total mileage driven, as well as the origination and destination must be documented. The $.36 differential from the MSU mileage per diem (currently $.53 per mile) can be submitted as taxable moving expense.

Taxable Moving Expenses
Meal expenses limited to meal per diem amounts, although reimbursable to the employee, are not included in the definition of non-taxable moving expense payments.

Moving Expense payments that do not fall within the non-taxable items described above may be reimbursable, however, they are taxable and require tax withholding.

Taxable moving expenses are subject to the withholding of federal income tax, state income tax, and FICA/Medicare tax, and will be reported on the employees Form W-2.

Payment/Reimbursement
The MSU Employee Moving Expense Information form should be prepared and submitted to the Payroll Department along with proper documentation of receipts. Please refer to your department for assistance in the preparation of the form and for assistance in the payment and reimbursement process of moving expenses.

Helpful Hints for the New Employee
  1. Meals are always taxable, if reimbursed.
  2. House hunting expenses are always taxable, if reimbursed.
  3. Receipts are always necessary to substantiate moving expenses claims. Employees should save all receipts.
  4. Storage of household goods beyond the initial 30 days is taxable, if reimbursed.
  5. Lodging beyond the first night at destination is taxable, if reimbursed.
  6. Tape, boxes, and packaging materials are non-taxable expenses.
  7. Mileage reimbursement is partially taxable. For 2017, the standard mileage rate is $0.53 per mile ($0.17 non-taxable; $0.36 taxable).

Internal Revenue Service (IRS) guidelines for the actual moving trip for household members are specific to one (one-way) trip per household member, including the employee. The trip must also be taken in the MOST DIRECT ROUTE to qualify for non-taxable reimbursement.

If only a designated amount has been negotiated for reimbursement of moving expenses, new employees should consider reimbursement of the non-taxable expenses prior to taxable expenses.

Please contact the Payroll Division (355-5010) if you have any questions regarding taxable and non-taxable moving expenses.


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