Financial Policies Training: Relocation Expenses (2.1.26) Revised: March 11, 2011

1. Financial Policies Training:Relocation Expenses (2.1.26)Revised: March 11, 2011

2. These PowerPoint slides are intended for training purposes. In the event of any discrepancy or interpretation difference between the policy and the slides, the policy dictates.

3. Agenda • Relocation Expenses Policy • Guidelines and Procedures • Reimbursement of Expenses • Relocation Allowance • Direct Payment to Commercial Moving Company • Suggested GL Accounts and Resources

4. Relocation Expenses Policy • Funding for business-related relocation expenses may be provided to • Newly hired faculty and staff • Current employees • Amounts • Not specifically limited • Based on org unit budgetary and market considerations • Documentation of agreed upon amount/expenses encouraged • Methods • Reimbursement of expenses -OR- • Relocation allowance (new) • In addition, direct payment by UC to a commercial moving company permitted

5. Reimbursement of Expenses Guidelines • Reimbursement through Payroll • Allowable expenses paid by relocating employee • Time and Distance Tests (IRS) • If both tests are met – reimbursements may be • qualified (non-taxable) for certain allowable expenses • non-qualified (taxable) for certain allowable expenses • If tests are not met – ALL allowable reimbursements are taxable (non-qualified) and subject to withholding

6. Reimbursement of Expenses Time and Distance Tests • Both tests must be met • (distance test) Distance between old home and new place of work must be at least 50 miles farther than distance between old home and old place of work • (time test) During 12-month period immediately following the move, employee expected to work • full-time for at least 39 weeks • in general location of the new workplace • Specifics/examples: Tax Compliance web site www.uc.edu/af/tax/Time_and_Distance_Tests.html

7. Reimbursement of Expenses Qualified reimbursable expenses (non-taxable): • Payments to a commercial moving company • Charges for packing/crating/shipping household goods and personal effects, including vehicles not used in the move • Cost of shipping pets • Cost of packing supplies • Insurance on such items as furniture and clothing • Truck rental for self-moving • In-transit storage for up to 30 consecutive days • Travel and lodging expenses for a single trip from the old residence to the new residence for the employee and family members, which may include: • Actual cost of gas, tolls, and parking, based on original itemized receipts, or the current mileage rate for moving, as set periodically by the IRS • Lodging while in transit • Air fare (coach only) and related ground transportation

8. Reimbursement of Expenses Non-qualified reimbursable expenses (taxable and subject to withholding): • Travel and lodging expenses incurred during additional trips between the old residence and the new residence • Expenses for meals at any point in the relocation process • House hunting expenses for one trip (not to exceed 5 days), including appropriate transportation, meals, and lodging • Temporary housing expenses following relocation

9. Reimbursement of Expenses Non-reimbursable relocation expenses: • Storage (other than 30 days while in-transit) • Meals and travel costs incurred by laborers • Expenses incurred by persons not considered dependents for tax purposes • Utility and telephone installation charges • Loss of security deposits • Real estate expenses • Postage costs for realty and mortgage documents • Personal communication or entertainment expenses • Extraordinary items requiring special handling (e.g., boats) • Bank fees for cashier’s checks Exceptions: • Above items may be reimbursed as a policy exception (Exceptions Form) • Require approval by senior vice president, vice president or dean

10. Reimbursement of Expenses Procedure • Org unit • Reviews applicable receipts; retains receipts (do not send to Payroll or HR Service Center) • Submits PCR in UC Flex using appropriate relocation expense wage type • 0MOV – qualified (non-taxable) relocation expense • 0MVT – non-qualified (taxable) relocation expense • Payment occurs in next payroll cycle • Subject to payroll production deadlines • No payments prior to effective date of employment

11. Relocation Allowances Guidelines • Org unit provides a check or a direct deposit in lieu of relocation reimbursements • May be in addition to direct payment to a commercial moving company • Full amount is taxable income; deductibility of qualified expenses is responsibility of employee taxpayer

12. Relocation Allowances Procedure • Org unit • Completes “Request for Prepayment of Relocation Expenses” form (available online) • Obtains Dean, VP or designee signature on request form • Determines if relocating employee prefers a check or direct deposit (EFT) for the relocation allowance • Provides relocating employee with “EFT Agreement for Individuals” form* for completion (available on Accounts Payable web site) if direct deposit is preferred • Submits request form, along with A114 and if applicable, the “EFT Agreement” form, to Accounts Payable, ML 0333 • Retains copy of request form for their records • Accounts Payable • Processes request form • Forwards form to Payroll for tax reporting/withholding • Org unit • Provides relocating employee a copy of request form * Note: EFT information provided on this form is for the relocation allowance only; direct deposit information for payroll checks must be provided in Employee Self Service (ESS) once the relocating employee has gone through the HR Onboarding process.

13. Relocation Allowances Advantages of this method: • For org unit • Maintain budget control (provide agreed upon amount prior to relocation) • Responsibility to determine tax deductibility of expenses becomes that of the relocating employee (taxpayer) not the org unit • For relocating employee • Funding provided in advance • No restrictions on funding use

14. Relocation Allowances Guidelines • Org unit provides a check or a direct deposit in lieu of relocation reimbursements • May be in addition to direct payment to a commercial moving company • Full amount is taxable income; deductibility of qualified expenses is responsibility of employee taxpayer

15. Direct Payment to Commercial Moving Company Guidelines • If such expenses will be incurred • Direct payment – highly encouraged (but not required) • Must use a moving company under contract with universityfor direct payment • Exceptions require prior, written authorization from Purchasing Department

16. Direct Payment to Commercial Moving Company Procedure • Org unit • Refers to Variant Expense Table • Moving companies under university contract • Steps for obtaining estimates • Creates, authorizes Purchase Order • Submits invoice referencing PO to Accounts Payable

17. Recommended General Ledger Accounts • 532700 – Moving Expenses • 530503 – Employee In-State Travel • 530504 – Employee Out-of-State Travel • 532500 – Rental & Lease

18. Resources • Financial Policies web site, www.uc.edu/af/policies,for • (under Financial Policies Documents) Relocation Expenses (2.1.26) • (under Forms) The Request for Prepayment of Relocation Expenses • (under Forms) Exceptions Form • (under Policy Highlights/Quick Reference) Relocation Expenses Tip Sheet • Policy questions e-mail:policyquestions@uc.edu • Variant Expense Table:http://www.uc.edu/content/dam/uc/af/budgetfinsvcs/controller/docs/variant.pdf • Time and Distance Tests:http://www.uc.edu/af/budgetfinsvcs/tax/resources.html#Relocation • IRS Publication 521, Moving Expenses: www.irs.gov/pub/irs-pdf/p521.pdf