“Well Were Movin’ On Up” – Taxable and Non-Taxable Moving Expenses

The era of great sitcoms has passed, if it ever existed. One of my favorite shows in the 70’s was The Jefferson’s. This show broke a lot of the rules when it came to television for this time period. The first line of the theme song for The Jefferson’s was “Well Were Movin’ on Up”, I can still sing the words to the first verse today! If you have not had the opportunity to see and episode of The Jefferson’s check the internet I am certain there are episodes available.

For this blog I would like to utilize the line “Well Were Movin’ on Up” to discuss reimbursable moving expenses and the compensation related rules. The IRS code is very specific regarding what can be treated as non-taxable reimbursement and what must be treated as taxable compensation when an employer wishes to pick up the bill for the relocation.

The basics are an employer can pay to move all the items, including items like boats and cars, and for storage for up to 30 days. The employer can pay for the expenses to move the family from the old residence to the new residence including hotel stays along the journey. The employer can reimburse up to .24 per mile for the drive or pay for air fare.
Here are some items that must be counted as taxable income should the employer decide to pay direct or reimburse an employee:
1. Mileage over .24 per mile.
2. Meal costs during the move.
3. Storage of items for over 30 days.
4. Expenses related to trips to the new location prior to the actual move.
5. Closing costs or relator fees associate with the purchase of a new house.
6. Housing provided to the employee or employee’s family while waiting on new home to be available.
7. Cash advanced to employee for moving expenses.
All of these items are treated as compensation and must be included in the employees taxable income by the end of the calendar year.
In addition, to be a qualified move the employee must be moving so that the distance from the old job to the new job is at least 50 miles and the employee stays at the new location (note: not the same job) at least 39 weeks of the next 52 weeks.
If you have questions regarding what is taxable and what is non-taxable when it comes to moving reimbursement contact The Payroll Answer Guy at gary@illuminaregroupinc.com.

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