The Tax Cuts and Jobs Act of 2018 has made all moving expenses not related to military purposes as taxable. This includes moving expenses paid to a third party. Taxes will be withheld at the graduated rate based on the number of exemptions indicated on the employee’s W4 form.
For expenses NOT being paid via non-standard, departments/units should submit forms to Payroll Services on a quarterly basis indicating the amount of paid expenses or reimbursements to employees and/or third-party vendors. The taxable amount can be divided over a certain number of pay periods, and the maximum number of pay periods depends on the number of pay periods remaining in the calendar year. If an employee would like to have the taxes taken in less pay periods, a written request needs to be sent by the unit/department to Kim Williams.
On the employee’s pay stub, there will be a description of TXBLE MOVE EXP on both sides. On the left hand side of the pay stub, the value to be taxed is added to the employee’s gross wages. The employee is then taxed on the higher amount. On the right hand side of the pay stub, the value to be taxed is deducted since it is not money actually earned. Only the additional taxes associated with the moving expense is actually withheld from the employee’s pay.
If an employee has both a third party payment and an expense reimbursement, the value being taxed may change depending on whether Payroll Services can receive both forms in the same pay period.