With the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), the U of I is required to modify its practice with respect to providing tax-free reimbursements of qualified moving expenses. Due to this change in federal law, moving expenses incurred by employees during calendar years 2018 through 2026 will be treated as wages and paid through the HR Transaction system as extra compensation.
Department heads (or designees) may authorize payment of reasonable moving and relocation expenses for new faculty and staff members as part of an offer of employment. Authorization for payment of moving expenses above $3,500 requires approval from the appropriate dean/vice president (or designee). (See also III-9 Hiring and Appointments; BRPM 2.1.4Q.)
Payment may be authorized for full-time faculty and institutional officials, professional and scientific and other full-time employees who are comparable in rank to assistant professor (P&S pay level 5) or above. Relocation expenses for full-time employees not defined above may be granted by specific approval of the appropriate dean/director or their designee. Local moves (less than 50 miles) for current employees or employees new to the University are ineligible. Relocation expenses should be determined with the new faculty or staff member during the hiring process and the amount should be included in the candidate’s offer letter.
The Beltmann Relocation Group will continue to serve as the University’s preferred vendor, however, the contract will be between the employee and Beltmann. The employee must work directly with Beltmann and identify that they are joining the University of Iowa. 800-859-4440 or BeltmannMoves@Beltmann.com. Employees may also select other vendors.
Payments must be paid through the HR Transaction system as special compensation under the category of “Employment Agreement – Transition and Relocation”. Payments may occur upon the first day of employment of a regular appointment or upon the first day of services related to a short term appointment which precedes and is related to a regular appointment. Departments may request that Payroll Services issue an off-cycle check to expedite payment. The special compensation amount may be equal to actual expenses or a lump sum payment. If the department wishes to pay for actual expenses, a maximum amount should be defined in the offer letter and the department is responsible for reviewing receipts.
2017 Calendar Year Commitments
Reimbursement of moves which occurred in 2017 must be processed through Accounts Payable before April 30, 2018 and will not be taxable to the employee. Although the change in tax law allows for tax-free reimbursement until June 30, 2018, Accounts Payable needs time to review and process transactions.
Moves which occur in 2018 may still be reimbursed through Accounts Payable, however, the employee will experience imputed income and associated income tax withholding on their next payroll check. Departments may choose to process the reimbursement as special compensation instead of reimbursing actual expenses through Accounts Payable. It is the discretion of the department to gross up payments for tax withholding.
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