Relocation Expenses Reimbursement Guidelines
A department may determine that it is reasonable and necessary to pay the relocation expenses of an employee. The reimbursement must be approved by the appropriate Vice President and funds must be available in the account charged.
The reimbursement of relocation expenses can be paid with either Local or State appropriated funds. Reimbursement will not exceed actual expenses incurred. Employer reimbursement of certain employee relocation expenses is excludable from the employee's gross income. See IRS Publication 521 - Moving Expenses for more detail.
Reimbursement Criteria and Limits
Relocation expenses may be reimbursed to faculty, administrative or professional staff positions for a total amount not to exceed 10% of the annual salary amount. Amounts in excess of 10% must be approved by the Vice President Business Affairs or the President.
Allowable Reimbursable Expenses include, from employee's prior home location to new city location: reasonable transportation, meals and lodging, moving services for household, personal goods and business/research equipment; pre-move house hunting; short-term temporary housing; and storage.
Moving services reimbursement requires use of the lowest and best of at least two moving service company estimates. Lowest and best is defined as the lowest price meeting the employee's requirements for service, quality and timeliness.
Exceptions to the reimbursement criteria and limits should be based upon position job market availability and employee specialized skills, and require the prior approval of the appropriate Vice President and the Vice President Business Affairs.
Reimbursement Procedures
Department submits a local funds voucher to the Payroll Office. The voucher must include a copy of the moving expense reimbursement allowance letter given to the employee, original receipts, the employee's signature and the authorized signature for the account to be charged.
The Payroll Office reviews the voucher, determines taxability, per U.S. Internal Revenue Service 1986 Code, Subtitle A, Chapter 1B, Part VII, Section 217, and issues payment.
Non-taxable moving expense reimbursements will be reported in Box 13 of the employee's Form W-2 under Code P - Excludable Moving Expense Reimbursements Not Included in Box 1.
Moving Vendor Direct Payment Option
A department may pay for an employee's moving expenses (services performed by one of the Approved Relocation Companies) by direct vendor payment. The department submits a purchase request to the Purchasing Office. A purchase order is awarded to a moving services vendor. The Disbursements Office pays the vendor upon receipt of services and the vendor's invoice. If any portion of the reimbursement is determined to be taxable, the value of the taxable portion of the reimbursement will be included in the employee's gross income and the appropriate taxes will be withheld.
Example
Albert Einstein has accepted the position of Assistant Professor. His 9-month salary is $90,000. Part of his offer includes reimbursement of moving expenses up to $12,000, which is 10% of his annualized salary. UTSA has procured a moving company through the appropriate bidding process for a cost of $8,900, which will be paid by UTSA. Dr. Einstein submits receipts for the following out of pocket expenses:
House hunting trip for him and his family, which includes airfare, meals, lodging and a rental car: $1890.56
Expenses associated with the actual move dates, which includes the following: gas receipts - $134.45; two nights lodging - $345.45; meals during trip - $123.34; one month temporary storage for belongings while new home is being made ready - $300.50; one month rent on an apartment while waiting for new home - $1200.00.
Taxable reimbursement includes all expenses associated with the house hunting, meals while moving and the rent on the apartment. These expenses total $3,213.90
Non-taxable reimbursement includes the fees paid to the moving company, the cost of gas , the lodging and the temporary storage. These total $9,680.40.
The grand total of expenses associated with his move is $13,194.80. However, the budget for moving expenses is only $12,000. He will be reimbursed $780.40 through a local funds voucher, which will be reported on the Form W-2 in Box 13; $8,900.00 will be paid on his behalf to the moving company; and $2,319.60 will be added to the next semi-monthly payroll, so that appropriate taxes will be withheld. [$780.40 + 8,900 + 2,319.60 = $12,000.00.] This amount will be reported on Form W-2 in Box 1.
