Moving Expense Reimbursements (105.013)

Moving Expense Reimbursements (105.013) - Policies, Administrative, UWMF, UWMF-wide, Finance


J:\AP\Policies & Procedures\Training Documents\Moving Expenses.doc
Updated 4-21-2009


The following document was prepared in response to questions on ALLOWABLE MOVING EXPENSES.
This policy was developed with review of IRS regulations and discussions with our external auditors.

The decision to pay for all or a portion of a faculty/employee’s moving expenses is up to each
department. Moving expenses are not routinely reimbursed for UWMF faculty/employees.
Reimbursement must follow the normal rules for reimbursement of expenses for travel and meals
under an accountable plan. IMPORTANT NOTE: The itemized receipt, rather than the credit card
signature slip, MUST be included for reimbursement. The credit card signature slip is not adequate
documentation. (Reference IRS Publ. 535.)

Moving expenses may be allowed for faculty/employees who meet the distance and time tests established
by the IRS.
 Distance Test – The faculty/employee moved at least 50 miles.
 Time Test – The move took place within a year of the start date of employment. You also must
work full time for at least 39 weeks after you arrive at the new location. Reimbursement will be
made under the assumption that this time test will be met.

Reimbursable expenses must adhere to IRS rules for allowable business expense deductions.
The University of Wisconsin Medical Foundation operates an Accountable Plan for the
reimbursement of these expenses. To be an accountable plan, our reimbursement arrangement
must require the faculty/employee to meet all three of the following rules:
1. Expenses must have a business connection. Two examples are the reasonable expenses
of moving possessions from an faculty/employee’s former home to the faculty/employee’s
new home, and traveling from the former home to the new home;
2. the faculty/employee must adequately account for the expenses in a reasonable time; and
3. the faculty/employee must return any excess reimbursement or allowance within a
reasonable time.

Deductible (qualified) moving expenses include only the reasonable expenses of:
 Moving household goods and personal effects from the former home to the new home, and
 Traveling (including lodging but not meals) from the former home to the new home.

Generally, reimbursement of qualified moving expenses to a faculty/employee can be excluded
from the faculty/employee’s wages. Amounts paid directly to a faculty/employee (upon proper
substantiation as noted above) would be reported in box 12 of Form W-2 with the code “P”.
Payments made to a third party for the faculty/employee’s moving expenses do not need to be
reported on the W-2.

Nondeductible (nonqualified) moving expenses include:
 Pre-Move house hunting expenses
 Meals
 Expenses of buying or selling a home (including closing costs, mortgage fees, and points)
 Any part of the purchase price of a new home

J:\AP\Policies & Procedures\Training Documents\Moving Expenses.doc
Updated 4-21-2009
 Any costs associated with the sale of the former home
- Improvements
- Loss on sale of home
- Real estate taxes
- Mortgage penalties
 Expenses of entering into or breaking a lease
 Security deposits
 Losses from disposing of memberships in clubs
 Storage costs
 Return trips to former residence

Any reimbursements received for nondeductible expenses and any allowances for miscellaneous or
unspecified expenses are treated as wages. These reimbursements would be considered a taxable
fringe benefit and MUST be added to the faculty/employee’s wages or for a non-employee
reported on a 1099-MISC. Taxable reimbursements made to faculty/employees are subject to
social security and Medicare withholding and federal and state income tax withholding.

For additional information, please consult the IRS website
at www.irs.gov for Publications 521 and 15B.