Reimbursement of travel expenses for relocation of newly recruited personnel is limited by departmental budgets and/or the terms of contracts and grants. Do not make a commitment to reimburse expenses without getting authorization from the appropriate department head, laboratory director, or manager.
You also might want to review the MIT Employment Policy Manual to determine which relocation travel expenses qualify for reimbursement.
If MIT does cover all or part of an employee’s moving expenses, you should make the employee aware of the federal tax implications of this benefit.
With the passage of the Tax Cuts and Jobs Act, beginning in 2018, moving expenses are no longer tax deductible and reimbursed moving expenses are subject to federal and state income tax.
VPF HR/Payroll will factor in the moving expense as income and withhold taxes on the amount from the employee’s next regular pay. If the moving expense is large, the tax amount withheld from the employee’s next pay may be a significant portion of the employee’s pay. In such cases, the employee can contact VPF HR/Payroll to make arrangements to modify the tax withholding schedule.
The reimbursement will be indicated on the employee's paystub as imputed income and reported on the employee’s W-2 Form.
Please contact VPF HR/Payroll with any questions on tax withholding.
For more information, see Page 9 of IRS Publication 5307 Tax Reform Basics for Individuals and Families.
The Details
Reimbursement of travel expenses for relocation of newly recruited personnel is limited by departmental budgets and/or the terms of contracts and grants. Do not make a commitment to reimburse expenses without getting authorization from the appropriate department head, laboratory director, or manager.
You also might want to review the MIT Employment Policy Manual to determine which relocation travel expenses qualify for reimbursement.
If MIT does cover all or part of an employee’s moving expenses, you should make the employee aware of the federal tax implications of this benefit.
With the passage of the Tax Cuts and Jobs Act, beginning in 2018, moving expenses are no longer tax deductible and reimbursed moving expenses are subject to federal and state income tax.
VPF HR/Payroll will factor in the moving expense as income and withhold taxes on the amount from the employee’s next regular pay. If the moving expense is large, the tax amount withheld from the employee’s next pay may be a significant portion of the employee’s pay. In such cases, the employee can contact VPF HR/Payroll to make arrangements to modify the tax withholding schedule.
The reimbursement will be indicated on the employee's paystub as imputed income and reported on the employee’s W-2 Form.
Please contact VPF HR/Payroll with any questions on tax withholding.
For more information, see Page 9 of IRS Publication 5307 Tax Reform Basics for Individuals and Families.
