![]() The lump sum cannot be paid out prior to the employee's first scheduled payday since it is subject to FICA and income tax withholding. When the lump sum payment is added to the employee's paycheck will be dependent on when the department submits the Additional Pay form with the payment information. For more information about tax withholding please contact the NDSU HR/Payroll Office. Lump sum payment to the employee (preferred):Ī lump sum payment for moving expenses will be paid to the employee via the HR/Payroll Office and will be included in the employee’s gross pay subject to applicable tax withholding and Form W-2 reporting. (NDSU interpretation: this represents the upper limit, departments may offer a lessor amount.)Īn employee should review the applicable policies, as well as the IRS tax treatment of moving expenses when determining which payment method would be most appropriate for them.ġ. Deviations from this rate must be approved by the President, and will only be granted in exceptional circumstances. Regardless of the payment method, new hires (not transferring from within the institution) reimbursement for relocation expenses should not exceed one month’s salary or $3,000, whichever is greater. ![]() For taxable reimbursements, federal and state income taxes, social security and Medicare taxes must be withheld. All moving-expense payments made to an employee or on an employee’s behalf are taxable income to the employee and will be reported on the employee’s Form W-2. Tax treatment of an employee’s moving expenses are governed by the Internal Revenue Service. The department should work with the employee in choosing the most appropriate payment method in paying moving expenses before the move. In addition, the department should inform the employee of the limits and guidelines defined by policy. It is the department’s responsibility to ensure the expenses claimed for reimbursement are consistent with the limits and guidelines defined by policy. The reimbursement method sometimes results in the employee not receiving reimbursement for all expenses promised by the hiring department because certain expenses may not meet the requirements. Paying the vendor directly for services provided. ![]() Reimbursing the employee for actual expenses incurred, or.The following guidance is to be used by departments in appropriately classifying expenses and reimbursable moving expenses under NDSU policy 171.ĭepartments have three options when it comes to paying for authorized moving expenses of a benefitted employee. The account code (#521050) for “Moving Expenses – Nontaxable” has been inactivated. There is no longer an advantage for the department to collect the employee’s receipts and process moving expense reimbursements for audit through the Accounting Office (via the Travel Expense module) in order to avoid taxes for the employee. As a result, all moving expenses paid by NDSU must be reported on employee’s payroll W-2 form as taxable income.īecause of this tax law change, effective immediately, the recommended process for moving expenses is to use the lump sum payment method via the HR/Payroll process. This tax law change also applies to direct payments by an employer on behalf of the employee, such as payments by an employer to a moving company. As of January 1, 2018, all moving expense reimbursements are considered taxable income to the employee.
1 Comment
3/7/2023 10:26:37 pm
When you start a new business, there’s a lot you don’t know. But worse than that, there’s often a lot you’re scared to ask – because you feel silly and think you should already know the answers. So we’re taking a look at which questions new businesses ask ANNA the most.
Reply
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |