With the implementation of the, Tax Cuts and Jobs Act that Congress passed in December 2017, there has been a significant change is how moving expenses are handled. For calendar years 2018 through 2025, Bradley University must include moving expenses in employees’ wages. The tax law suspends the exclusion for qualified moving expense reimbursements. Unreimbursed employee moving expenses can't be deducted by the employee as miscellaneous expenses. All moving expenses are now taxable wages to the employee.
Prior to the Tax Cuts and Jobs Act, individuals moving for a job were allowed to claim moving expense deductions on their taxes. The IRS allowed these moving deductions only when the person was moving for job-related reasons. The requirements for classifying it as a job-related move included:
- The time requirement – The move had to be closely related to the start of work. This meant that taxpayers had to be working full-time at the new job for at least 39 weeks within the first year of moving.
- The distance requirement – In order to prove that you were moving for work, the commute from the old home to the new job location had to be at least 50 miles longer than the old commute.
If the individual met the above requirements, the individual could deduct certain moving expenses from your federal income taxes. However, these expenses must have been necessary for your move. Examples included:
- The cost of hiring professional movers and/or packers
- The cost of renting a moving truck
- The cost of moving supplies such as boxes
- The cost of insuring belongings during a move
- The cost of connecting and disconnecting utilities due to the move
- The cost of moving your car
- The cost of storing belongings for up to 30 consecutive days after the move
- The cost of temporary lodging, often needed when moving for work
- The cost of gasoline, oil, parking fees, tolls and other transportation expenses related to moving
Mileage is allowed at the IRS allowable moving rate from the starting location of the move to the Central Illinois destination location in lieu of the cost of fuel when a personal vehicle involved in the move.
Those moving expenses which are not allowed to deducted: the cost of buying or renting a new home; the cost of meals and food while on the road; the cost of house-hunting or pre-move visits; and any expenses that were already reimbursed by an employer.
Even though the Tax Cuts and Jobs Act no longer distinguishes between a qualified moving expense and a non-allowable moving expense, Bradley University still utilizes this distinction in determining whether the University will pay for a specific moving expense or not. Currently, the University will issue payment for qualified moving expenses as defined above if the move is to Central Illinois. The University will not issue payment for non-allowable moving expenses.
Therefore, moving expenses a) must be to relocate to Central Illinois; b) must meet the time requirement; c) must meet the distance requirement and d) must have been necessary for the move before Bradley University will issue payment for such an expense. The payment will be treated as taxable income to the individual moving as directed by the IRS.
One additional point which is not related to moving expenses but is a factor to consider in a relocation move, the University does not reimburse for normal work commute mileage. This is consistent with IRS rules and regulations.
Procedures for Payment
A University requisition must be completed. The appropriate Financial Edge account string (Fund Code-Account Code-0000-Project Id) is required on the requisition. If funding is from multiple project ids, all project ids must be listed on the requisition. Please do not submit multiple requisitions for the same move as this may cause confusion and delay the payment process. Approval of the requisition must be obtained from the Dean and the Provost or respective Vice-President for non-academic divisions.
The requisition must indicate the start and end dates of the actual move, the starting location of the move and the Central Illinois destination location of the move. Original, itemized receipts expenses must be submitted with the requisition. Receipts for temporary lodging, fuel, tolls, and other transportation expenses related to moving must be within the dates of the actual move. The moving expenditures must have already been paid by the employee. For instance, moving company invoices should either show a zero balance due or the employee has provided proof of payment (i.e. personal check, credit/debit card statement).
The approved requisition and accompanying receipts and documentation should be submitted to Financial Services, 103 Swords Hall, for processing within a reasonable period of time after the move has occurred.