By Javier Martinez,
Director of Payroll Management Services
October 2008
Relocation Reimbursement
What are we going to cover?
• Internal Revenue Service
Requirements
• UTSA Requirements
Relocation IRS Requirements
Initial Tests of Deductibility
 Deductible Moving Expenses
 Reporting

Initial Test of Deductibility
Time Test
 During 12 month period immediately following the move,
employee must work full time for at least 39 weeks.
 What if he does not stay 39 weeks?
 What do we do?
 Answer: Nothing
Initial Test of Deductibility
Distance Test
 New workplace must be 50 miles further from employee’s former
residence.
Old Work
New Work
10 miles
60 miles
Home
Relocation IRS Requirements
Initial Tests of Deductibility
 Deductible Moving Expenses
 Reporting

Deductible Moving Expenses
Only two types of deductible Relocation
Expenses
 Transportation of Household goods
 Traveling
Deductible Transportation of
Household Goods
Reasonable expenses incurred …
 Packing
 Moving
 Insuring
 Storing In-Transit
○ 30 day limit
○ From old residence and before delivery to new
residence
 Employer can pay Moving Company
directly
Deductible Relocation Travel
Expenses
Reasonable expenses incurred…
 Transportation
○ Flights
○ Automobile (Self-drive)
 Mileage: $0.27 per mile (Effective 07/01/2008)
 Actual Receipts
 Lodging
Relocation IRS Requirements
Initial Tests of Deductibility
 Deductible Moving Expenses
 Reporting

Qualified Relocation Expense
Initial Tests
of
Deductibility
Deductible
Relocation
Expense
Relocation expenses must pass both criteria…
Qualified
Relocation
Expense
Wages
“All remuneration for employment,
including the cash value of all
remunerations (including benefits) paid
in any medium other than cash” IRC
§3121(a)
Great News!
Qualified Relocation Expenses
reimbursements are Non-Taxable Fringe
Benefits
 Amounts paid or reimbursed by the
employer are a non-taxable fringe
benefit to the extent the moving
expenses qualify for a deduction and if
the employee did not deduct them in a
previous year. IRC §132(a)(6), §132(g)

Reasonable Expenses
“Reasonable” Expenses
What are reasonable
expenses?
What does this mean?


Relocation expenses are
deductible only to the
extent they are
reasonable under all
circumstances related to
the move. IRS Reg
§1.217-2(b)(2)
Transportation Expenses




Packing
Moving
In-transit storage
Includes specialized
Movers
○ Pianos
○ Oversea Shippers

Traveling Expenses
 Transportation
 Lodging
Non-deductible Expenses
(IRS Pub 521)













Any part of the purchase price of the new home
Car Registration (tags)
Driver’s License
Expenses of buying or selling a home
Home improvements to help sell your home
Loss on the sale of home
Mortgage Penalties
Pre-move house hunting expenses
Real Estate Taxes
Refitting of carpet and draperies
Return trips to former residence
Security Deposits
Storage Charges (excluding In-Transit)
Relocation Expense
Reimbursement Reporting

How does the IRS know?

Answer: We are required to tell them.
Relocation Expense
Reimbursement Reporting to IRS

Qualified Moving Expenses
Reimbursement:
 Form W-2: Box 12 Code P
○ i.e. P 1200.00

Non-Qualified Non-Deductible:
 Form W-2: Box 1 , 3, and 5
Relocation Reimbursement
What are we going to cover?
• Internal Revenue Service
Requirements
• UTSA Requirements
UTSA Relocation Reimbursement
Requirements
Relocation Authorization
 Relocation Limit
 Reimbursement Criteria
 Relocation Reimbursement Payment
Procedure

UTSA Relocation Amount
Authorization
Vice-President Level Authorization
Required
 Vice-President may delegate

 Delegation of Authority Memo
UTSA Relocation Amount Limit
10% of Computed Annualized Salary of
the prospective employee
 Not required to offer Relocation
Reimbursement, nor to the employee
limit
 Exception to 10% Limit:

 Approval by Vice President Business Affairs
 (or ) Approval by President
UTSA Relocation Reimbursement
Criteria
Qualified Transportation of Household
Goods
 Qualified Travel
 Qualified Lodging
 Meals*
 Pre-move House Hunting*
 Temporary Housing*
 Storage*

*Taxable Income to the employee
Relocation Payment Process

Reimbursement Process: submit to Payroll
 Offer Letter of Employment (must contain Relocation
Amount)
 Original Receipts
 Local Funds Voucher
○ Employee’s Signature
○ Account Signer Approval Authority
○ Vice-President Approval Authority (one of the following)

On Offer Letter
 Email attached to Offer Letter
 Co-sign Local Voucher
 Delegation of Authority Memo on file with Payroll Office

Direct Pay to Moving Company via P.O.
UTSA Relocation Reimbursement

Questions?