NEW! Under the Tax Cuts and Jobs Act of 2017, the personal deduction for relocation expenses and the exclusion from income of employer-paid relocation expenses are suspended from January 1, 2018 through December 31, 2025. As a result, all moving expenses incurred on or after January 1, 2018, whether reimbursed to an individual or paid to a vendor on behalf of an individual, are taxable income to the individual.
General Procedures
All relocation expenses, whether reimbursed to the employee or paid directly to vendors, must be reported to the Tax Department on the Relocation Expense Form after the individual’s appointment in Workday. All forms must be accompanied by the required backup documentation. See detailed instructions included with the form.
Relocation expenses for any one individual may be submitted on a single form or multiple forms. It is the hiring/paying department’s responsibility to track total relocation package costs.
Reimbursements
The reimbursement request must be made on a Relocation Expense Form. Original receipts are not required for reimbursement expenses. Only copies of receipts will be accepted by the Tax Department. All forms and related supporting documentation should be sent electronically to the Tax Department at taxdepartment@wustl.edu with the Subject: Relocation.
Note that copies of receipts submitted with the Relocation Expense Form are for substantiation of expenses incurred only. The Tax Department will not review for mathematical correctness. It is the hiring/paying department’s responsibility to ensure the accuracy of amounts reported.
Third party payments to vendors
All Workday documents for third party relocation expense payments (POs, SIRs, ProCard Payments, et al) must include the following:
- Individual’s full name
- Individual’s position
- Individual’s anticipated start date
- Individual’s WU EMPLID, if already issued.
- In the event the EMPLID has not yet been issued, the hiring department must provide the Tax Department with a valid US taxpayer identification number (SSN or ITIN) prior to document approval.
- SSN’s and ITIN’s should not be visible on the Workday document.
Please be aware that payments made directly to vendors are subject to payroll tax withholding. Reporting these payments as soon as possible will allow the withholding to be spread over several pay periods if needed. If the individual is a non-employee, all amounts will be reported on a Form 1099-MISC.
Timing of Relocation Expenses
All relocation expenses, whether reimbursed to the employee or paid directly to vendors, should be submitted to the Tax Department on a Relocation Expense Form within 60 days of the individual’s appointment in Workday. Failure to report reimbursements timely results in delayed payment of expenses incurred by the employee out-of-pocket. In addition, payments for relocation expenses made to vendors on behalf of employees are taxable and must be reported to Payroll for inclusion on the employee’s Form W-2. This means that there will be additional withholding taxes deducted from the employee’s paycheck. Reporting these payments as soon as possible will allow the withholding to be spread over several pay periods if needed. Failure to report third party payments timely may also result in the issuance of a correction to the Form W-2, Form W-2C. This could delay the employee’s ability to complete their annual IRS income tax return or result in requiring the employee to file an amended return.
As a matter of best practice, reimbursement or payments to third parties of relocation expenses for new employees before the individual is hired should be discouraged. The method and effect of tax reporting is dependent upon whether the individual joins WU. Therefore, reimbursements should not be made until the individual is an active employee. Note that reimbursements prior to an individual’s start date are unallowable on a sponsored fund.
Paying relocation expenses prior to appointment date, whether reimbursed or paid to a vendor on behalf of the individual, affects the type of tax reporting required and can result in unanticipated tax withholding. Payments prior to the appointment date are highly discouraged. When necessary to reimburse prior to appointment, the Waiver for Advance Payment must be completed. The waiver is available at: https://financialservices.wustl.edu/forms/. Under no circumstances will a reimbursement be made prior to appointment if the reimbursement amount is less than $2,000 or within 60 days prior to the appointment date. Contact the Tax Department at taxdepartment@wustl.edu for more information about reimbursements prior to appointment.
Tax Reporting of Relocation Expenses
Employees
All amounts will be reported on the individual’s Form W-2, boxes 1, 3, and 5.
Non-employees
All amounts paid to or incurred for non-employees who are not students or stipend recipients will be reported on a Form 1099-MISC.
Students/Stipend Recipients
All amounts paid to or incurred for students or stipend recipients who are US persons for tax purposes will be included on the individual’s annual Stipend Tax Letter.
All amounts paid to or incurred for students or stipend recipients who are nonresident aliens for US tax purposes will be reported on Forms 1042-S and may be subject to withholding.