2324 Reimbursement of Moving Expenses

Deans, resource center directors, vice presidents, or vice provosts must approve any payment of a newly recruited employee’s relocation costs in advance and in writing.

The Tax Cut and Jobs Act of 2017 repeals the employee deduction and income exclusion for qualified moving expenses.  Therefore, all moving expenses will now be reimbursed as taxable wages reported on form W-2 for employees.  This is effective on and after January 1, 2018. 

Under the law, all reimbursements provided by the employer for moving expenses are considered additional compensation and subject to income tax withholding.  This change impacts reimbursements for moving expenses incurred by and paid directly to employees or paid on behalf of the employee to a third party or parties.

The request for relocation reimbursement must be made through the payroll system as a “One-Time payment – Relocation Expense” or imputed income.

If a relocated employee voluntarily leaves the University, schools and centers have the option of requiring repayment of the relocation expenses (you should indicate in your offer letter whether you’ll require this type of repayment.) For employees who leave within the first year of employment, 100% repayment should be required. Employees who leave within the second year of employment should repay 50% of the relocation expenses.

Employees should always be encouraged to use SIRVA, Penn’s preferred relocation vendor, rather than moving themselves. Workers are considered “on the job” when they choose to move themselves, and any accident or injury could be a worker’s compensation issue.