Tax Treatment of Relocation Expenses
Moving expenses for new faculty or staff employees fall into one of two categories: taxable or non-taxable.
The majority of payments such as household move, airfare, etc. will be paid to a third party according to University policy and are non-taxable. Incidentals reimbursed directly to employees for expenses such as transportation are considered to be out-of-pocket expenses and are non-taxable. Treatment of these expenses is described below.
The University will pay directly for most moving expenses including household goods, personal effects and transportation to minimize the traveler’s out-of-pocket costs and income tax reporting for the employees in connection with non-taxable expenses.
Reporting for non-taxable expenses is required as follows:
|Payment Made To||Taxability||Tax Reporting|
|Third-party vendor||Non-taxable||Not required|
|Incidentals paid directly to employee||Non-taxable||Reported information on W-2 (Box 13)|
Non-excludable expenses must be included in the employee's gross income such as house-hunting trips, temporary housing and meals. The UCLA Payroll Office deducts the appropriate tax percentage from the employee’s federal and state tax and the remainder appears on the employee's monthly or biweekly paycheck.
Reimbursement of taxable moving expenses must be included in the employee’s gross income as wages subject to withholding of income and employment taxes. These expenses include payments for meals, pre-move house hunting trips, and temporary living expenses. The current tax withholding rates are determined by the employee’s appointment. The gross amount of the payment and withholdings will be included on the W-2 in the year in which payment is made.