CapRelo Blog

Which Relocation Expenses Can Be Excluded from Income Tax?

Posted by Amy Mergler on Fri, Mar 10, 2017

TaxesRegardless of the distance or time of year, relocating for a job is an expensive undertaking. Fortunately, many employers have relocation packages in place that reimburse employees for some, or all, of their moving expenses. Some relocation expenses are excludable from income tax, while others are considered additional taxable income by the IRS.

Learn more about relocation and U.S. taxes in our free guide.

Excluded Moving Expenses

Qualified relocation expenses are not included in an employee’s income. They are paid directly to the employee or to third parties. Excludable expenses paid directly to the employee are noted on the employee’s W-2 form in box 12, while payments made directly to third parties on the employee’s behalf need not be reported on their W-2.

Excludable moving expenses typically fall into two primary categories, household goods and final move expenses. Below are some common costs related to these two categories.

Moving Household Goods

  • Packing and unpacking household goods at the original and new residences
  • Disconnecting, then reconnecting utilities for each home
  • Transporting pets from the original residence to the new location
  • Packing, crating and boxing supplies
  • Transporting personal vehicles to the new location
  • Storage expenses, usually for 30 to 90 days (depending on the policy and individual circumstances)
  • Insurance on the household goods

Final Move Expenses

  • Transportation expenses to physically move the employee and his/her family to the new residence
  • In-transit lodging for the family
  • Mileage expenses for employees traveling by car, but only the first $0.19 per mile in 2017 (varies each year) is excludable from income

To be excludable from income, the employee should take the most direct route to the news home.

Where to Find Information on Excludable Relocation Expenses

Visit the IRS website to find the most up-to-date information on excludable relocation expenses. Specific information on relocation expenses is outlined in IRS Publication 521, Moving Expenses.

Reloc

 

Although this written communication may address tax issues, it is not a covered opinion as described in Circular 230.  Therefore, to ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments), unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein.

Topics: tax impact of relocation, relocation expense reimbursement, employee relocation expenses, relocation taxes, employee relocation

Cut Executive Relocation Costs without Reducing Service

Posted by Mickey Williams on Mon, Aug 15, 2011

Many companies today are looking to reduce executive relocation costs through programs like lump-sum relocation packages or simply eliminating executive relocation expense reimbursement or payments entirely.

However, this can reduce your company's strategic advantage in the marketplace because you're limiting the company's ability to recruit and retain top talent to your area after a corporate move.

You Can't Put a Price on Service

At CapRelo, we can structure a company relocation program for your employees that saves your company money while keeping your relocating employees and prospects happy. We know a low-stress relocation is not just about the money.

It's about service providers who do what it takes, and then go above and beyond what's expected when necessary to keep employees happy. Our non-exclusive supply chain partners and the relationships we have across the relocation industry help us offer these services, including HHG moving, people moving, temporary housing, real estate and mortgage services and more, at competitive rates.

 
We'll provide white glove service to top executives who always expect the best. If this means having our employees on-site during a move, hiring service providers willing to work outside of normal hours, or scheduling all-inclusive scouting tours that showcase all the desirable traits of the region, we'll do it.

Because we spend your budget dollars wisely, you can cut executive relocation costs while offering low stress moves and improving recruiting and retention rates for top execs.

Download

Topics: relocation expense reimbursement, Corporate Relocation Costs, corporate relocation program, executive relocation package

New Call-to-action

Subscribe to Email Updates

Posts by Topic

see all