The university reimburses an employee for both qualified and non-qualified moving expenses under section 132 of the Internal Revenue Code.  The qualified moving expenses are not taxable income to the employee and are not subject to tax withholding.  The non-qualified moving expenses are taxable income to the employee.  They are subject to tax withholding and will be reported on the employees W-2.  Because the employee is reimbursed 100% for these expenses, the tax withholding will come from the regular paycheck the employee receives.

The non-qualified moving expenses that are taxable include, but are not limited to the following:

Incidental allowance – This amount is fully taxable as an unsubstantiated expense.  Any receipts for packing supplies, and other expenses directly related to the move may be turned in to the payroll office to substantiate the expense, and offset the taxable income.

Automobile Registration – This expense is not considered a moving expense under section 132, and is fully taxable.

Meals and per diem – The cost of meals while traveling is not considered a qualified moving expense under section 132, and is fully taxable.

Mileage over 18 cents per mile (2006), 20 cents per mile (2007) – The IRS allows 20 cents per mile per vehicle as a qualified moving expense.  All amounts reimbursed over this limit are fully taxable.  Receipts can be kept for all gas and oil used during the move for each vehicle, and turned in to the payroll office. If these receipts total more than 20 cents per mile, this amount can be used instead of the cents per mile method in determining the non-taxable portion of the mileage you have been reimbursed for.

Non-qualified moving expenses are included on your W-2 as wages in boxes 1,3 and 5, with the appropriate taxes withheld.

Qualified moving expenses, while not taxable, are also reported on your W-2 in box 12P for use in filing your income tax return. Qualified moving expenses include the following:

Mover’s billing – The cost to move all household goods from the old residence to the new residence, whether you contract with a moving company or rent a moving van on your own is a qualified expense.  This expense, if paid to a moving company by the university, is not reported on the employee’s W-2. 

Hotel expenses – The cost of hotels while the family is in transit from the old location to the new is a qualified expense. 

Airfare – If one or more members of the family fly instead of going by car, the airline ticket is a qualified moving expense.  

Last Revised 08-20-2007