Moving expenses may consist of moving household goods, house hunting, and temporary housing expenses associated with relocation. Reimbursement by the employer for moving expenses must comply with POL 05.15.03 for Non-Salary and Deferred Compensation, be authorized in advance and paid from non-state-appropriated funds. For individuals not specifically entitled by the policy, the Non-Salary Compensation Form must be completed and submitted and approved by the Board of Trustees (BOT) prior to payment. A copy should be included in the documents submitted to the University Controller’s office, when payment is requisitioned. There are 3 types of moving-related-expenses:
Household Moving Expenses: Costs for movement of standard household goods and personal effects of the employee and their immediate family. The Chancellor, the Provost or a Vice Chancellor, or the Athletic Director, may authorize such expenses (up to a designated limit) by this policy as part of an initial appointment offer for a tenured or tenure-track faculty member or in the case of Athletics, for initial appointment offer for a coach, assistant coach and assistant/associate athletic directors. For those not covered by this policy, authorization by the BOT must be requested on a case-by-case basis, in advance of the offer.
House Hunting Expenses: Costs to cover employee travel and subsistence for up to two 2-day trips, for the purpose of house-hunting with family, are reimbursable to executive administrators (JCAT 100s) and tenure/tenure-track faculty (JCAT 200-205), by this policy. All others must be requested on a case-by-case basis, in advance, and subsequently authorized by the BOT.
Temporary Housing: Reimbursement for the cost of temporary housing (receipts required) are authorized by this policy for top executive officers (JCAT group 1A), senior institutional/chief functional officers (JCAT 1B), tenured full professors (JCAT200), head coaches (JCAT 498) and assistant coaches (JCAT 499). Costs cannot exceed $2,000 per calendar month; and may be paid for up to 6 months (3 months for assistant coaches). Exceptions for individuals not covered by this policy or for expenses that exceed these limits, must be requested on a case-by-case basis, in advance, and subsequently authorized by the BOT.
Taxation of Payment
Moving-related expenses are divided into two categories for tax determination: Qualified and Non-Qualified.
Qualified moving expenses are typically reimbursed to the employee for moving household goods and personal effects of the employee and their immediate family, and follow criteria set by IRS. Reimbursements paid to a third party on behalf of he employee (for example, to a moving company) are not reported on Form W-2. Reimbursements paid directly to the employee, so long as it meets IRS criteria, are not taxable but are reported in Box 12 of the employee’s W-2 with the code of “P”.
Non-qualified moving expenses are typically expenses incurred for house hunting trips, meals, temporary housing expenses, and temporary living costs associated with the disposal of the old residence and acquisiton of the new residence. Non-qualified expenses are taxable and included in the taxable grosses for social security, Medicare, federal, and state reporting. Social security (OASDI) and Medicare taxes (Fed-Med) are withheld on the paycheck.
The distinction of qualified and non-qualified expenses for tax purposes falls under the domain of the University Controller’s Office. For a more thorough review of the taxability of moving expenses, please refer to the Moving Expenses webpage of the NC State University’s Controller’s Office. Questions should be directed to the University Controller’s Office at 515-3824.
- Employee: The employee must provide documentary evidence (such as receipts, substantiation of mileage, etc.) to the department in order to receive reimbursement.
- College or Department: The department must enter the reimbursable items into the Financials System and forward the substantiating receipts to the University Controller’s Office.
- University Controller’s Office: The University Controller’s Office must compile qualified (non-taxable) moving expenses onto a spreadsheet and submit it to University Payroll in late December for inclusion on the employee’s W-2, Box 12, Code “P”. Non-qualified (taxable) moving expenses must be compiled on a spreadsheet and submitted to University Payroll on an annual basis for gross up and appropriate tax withholding. Moving-related expenses for individuals not authorized by policy or approved by an exception by the Board of Trustees will not be paid.
- University Payroll: Using the appropriate earnings code, University Payroll will enter the qualified moving expenses into the employee’s W-2 record. Non-qualified moving expenses will be entered into the HR System for inclusion on the employee’s next regular payroll and applicable taxes applied. There are 3 earnings codes that define the type of moving-related expenses:
- MHN: MoveHouseExp-No Tx (Moving Expenses, Non-Taxable)
- MHT: MoveHouseExp-Tax (Moving Expenses, Taxable)
- TH1: Housing Temp (Temporary Housing, Taxable)