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Comptroller's Office
University of Pennsylvania
Suite 329 Franklin Building
3451 Walnut Street
Philadelphia, PA 19104
215.898.1552 (Phone)
215.573.5269 (Fax)

[ Corporate Tax ]

University of Pennsylvania

Taxability of Relocation Expenses for Faculty and Staff

Summary

 This guide sets forth tax implications to facilitate the moving of new University of Pennsylvania faculty and staff, where such action is considered to be in the best interests of the University.  The Relocation Policy of the University of Pennsylvania is designed to give maximum flexibility to schools, departments and other organizational units while assuring compliance with Federal, State and Local regulations.  The provisions of this policy apply only when an offer of employment is made. **

 Tax Implications

 1)      Reimbursement Reported as Additional Income – When applying this relocation policy, departments should be aware that the Internal Revenue Service (IRS) requires the University to report any reimbursements and advances associated with the move that are not in accordance to IRS guidelines as additional compensation income to the employee, subject to payroll taxes.

a)      Additional reimbursements and advances if allowed by the University of Pennsylvania’s relocation policy and reported as additional income, include but are not limited to the following:

i)        House-hunting expenses

ii)       Temporary living expenses

(1)   All temporary living expenses are tax reportable, except for the day of departure from the old residence and the day of arrival in the new location

iii)     Same-sex domestic partner moving expenses

iv)     En route meals

v)      Vehicle allowance over IRS approved mileage rate for moving (see Travel Department website for current rates http://www.finance.upenn.edu/comptroller/travel/ground/mileage.shtml

vi)     Storage of household goods over 30 days

vii)   Expenses for return trips to the employee’s former residence

Guidance on tax issues may be obtained from the Comptroller’s office.  Further information about tax reporting of moving expenses may be obtained from the IRS website at http://www.irs.gov/formspubs/index.html  Publication #521: Moving Expenses

2)      Reimbursement Not Tax-Reported as Additional Income – Reimbursements and advances of “qualified moving expenses” are not tax reportable as additional income.  These reimbursements are reported as information only.  IRS guidelines identify the following criteria for “qualified moving expenses”.

a)      The Job is:

i)        A new job for the person being moved

ii)       Full-time

iii)     Expected to last at least 9 months if a new employee, or 12 months if a relocation  of an existing employee

iv)     At least 50 miles farther from the old residence than the old job was from the old residence.

 b)      Qualified Moving Expense includes reasonable costs for:

i)        Moving household goods and personal effects.  -  All or part of the actual and reasonable expenses of moving the household goods of a new employee may be reimbursed.

(1)   Qualified/Deductible Moving Expenses:

(a)    The actual cost of packing, crating, transporting, unpacking, and uncrating household effects

(b)   Costs incurred for moves to and from storage

(c)    Storage Costs TAX NOTE:   Taxable after 30 days

(d)   Costs of connecting and disconnecting household equipment

(e)    “All risk” replacement cost insurance (which should be arranged through the shipping agent or carrier)

(f)     Household pets

(g)    En route expenses (check the Comptroller’s web site for current applicable mileage rate for moving) including lodging but not meals http://www.finance.upenn.edu/comptroller/travel/ground/mileage.shtml

(h)    Storage of household goods for up to 30 days

 (2)   Non-qualified/Non-deductible Moving Expenses:

(a)    Storage charges other than for goods and effects in transit

(b)   Costs incurred in the acquisition of property

(c)    Costs incurred in the disposition of property

(d)   Penalties for breaking leases

(e)    Mortgage penalties

(f)     Costs of refitting rugs or draperies

(g)    Club dues, tuition dues and similar fees that have not expired at the form place of residence.

(i)      TAX NOTE:  Reimbursements received for nondeductible expenses are treated as additional income.

c)      The Individual’s whose expenses qualify are:

i)        A new employee or current employee transferring to a qualified Job

ii)       Members of the employee’s household as defined by the IRS (The IRS does not recognize a domestic partner as a member of the employee’s household. Therefore reimbursements will be taxable.)

 3)      Moving of Laboratories – Moving of laboratory supplies and equipment is a University of Pennsylvania business expense, not subject to IRS reporting.

Please be advised, that any hiring department that chooses not to utilize Whalen's Allied either by using another third party or by contracting with vendors directly to initiate employee relocation, will be charged a minimum fee of $500 instituted by the Payroll Department. This fee is necessary to cover the cost of administrative effort of monitoring and controlling payment as well as ensuring tax compliance of these transactions.
Account Number:_________________________________________________

Relocation Information Form 

**This outline applies to new University of Pennsylvania faculty and staff.  Those employees covered by collective bargaining agreements should refer to the applicable agreement.  All relocation expenses incurred and reimbursed to Post Doctoral candidates are subject to tax in their entirety.