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K-State Today

January 24, 2018

Moving expenses are now taxable

By Human Capital Services

Recent federal tax legislation removes exemptions applicable to moving expense direct pays and reimbursements. Under the new law, which became effective Jan. 1, all payments for moving expenses to, or on behalf of an employee must be reported as wages and taxes must be withheld.

Accordingly, as of Jan. 1, all reimbursements of moving expenses to current or prospective employees will be reported to Human Capital Services-payroll so that the appropriate taxes may be withheld from employee paychecks. This is true even if the expenses were incurred in a prior year, and the employee is not reimbursed until 2018.

Likewise, when the university contracts with a moving company to assist an employee with a move taking place on or after Jan. 1, those amounts will be reported to Human Capital Services-payroll so that employees may be taxed appropriately.

What does this new tax bill change mean?

All moving expenses, regardless, if reimbursed to an employee or paid directly to a moving company is taxable. The distinction of qualified — nontaxable — and non-qualified — taxable — moving expenses have been suspended through Dec. 31, 2025. All moving expenses will be taxed accordingly and reported in box 1 of the W-2 form.

Reference: K-State policy and procedures, chapter 6320, Document Completion Procedures.

Questions may be directed to Human Capital Services at 785-532-6277 and/or Division of Financial Services at 785-532-6210.