Offer Letter to Purchase a Home - PowerPoint by szq34841


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									                      By Javier Martinez,
Director of Payroll Management Services
                           October 2008
Relocation Reimbursement

What are we going to cover?
• Internal Revenue Service
• UTSA Requirements
Relocation IRS Requirements
 Initial Tests of Deductibility
 Deductible Moving Expenses
 Reporting
Initial Test of Deductibility
Time Test
   During 12 month period immediately following the move,
    employee must work full time for at least 39 weeks.

   What if he does not stay 39 weeks?
   What do we do?

   Answer: Nothing
Initial Test of Deductibility
 Distance Test
     New workplace must be 50 miles further from employee’s former

    Old Work

                                                  New Work

  10 miles                             60 miles

Relocation IRS Requirements
 Initial Tests of Deductibility
 Deductible Moving Expenses
 Reporting
Deductible Moving Expenses
Only two types of deductible Relocation
   Transportation of Household goods
   Traveling
Deductible Transportation of
Household Goods
Reasonable expenses incurred …
   Packing
   Moving
   Insuring
   Storing In-Transit
    ○ 30 day limit
    ○ From old residence and before delivery to new
   Employer can pay Moving Company
Deductible Relocation Travel
Reasonable expenses incurred…
   Transportation
    ○ Flights
    ○ Automobile (Self-drive)
       Mileage: $0.27 per mile (Effective 07/01/2008)
       Actual Receipts

   Lodging
Relocation IRS Requirements
 Initial Tests of Deductibility
 Deductible Moving Expenses
 Reporting
Qualified Relocation Expense

Initial Tests               Deductible                Qualified
      of                    Relocation               Relocation
Deductibility                Expense                  Expense

      Relocation expenses must pass both criteria…
 “All remuneration for employment,
  including the cash value of all
  remunerations (including benefits) paid
  in any medium other than cash” IRC
Great News!
 Qualified Relocation Expenses
  reimbursements are Non-Taxable Fringe
 Amounts paid or reimbursed by the
  employer are a non-taxable fringe
  benefit to the extent the moving
  expenses qualify for a deduction and if
  the employee did not deduct them in a
  previous year. IRC §132(a)(6), §132(g)
Reasonable Expenses
“Reasonable” Expenses
What are reasonable            What does this mean?
                                   Transportation Expenses
   Relocation expenses are            Packing
    deductible only to the             Moving
    extent they are                    In-transit storage
    reasonable under all               Includes specialized
    circumstances related to            ○ Pianos
    the move. IRS Reg                   ○ Oversea Shippers
    §1.217-2(b)(2)                 Traveling Expenses
                                     Transportation
                                     Lodging
Non-deductible Expenses
(IRS Pub 521)
   Any part of the purchase price of the new home
   Car Registration (tags)
   Driver’s License
   Expenses of buying or selling a home
   Home improvements to help sell your home
   Loss on the sale of home
   Mortgage Penalties
   Pre-move house hunting expenses
   Real Estate Taxes
   Refitting of carpet and draperies
   Return trips to former residence
   Security Deposits
   Storage Charges (excluding In-Transit)
Relocation Expense
Reimbursement Reporting

   How does the IRS know?

   Answer: We are required to tell them.
Relocation Expense
Reimbursement Reporting to IRS
   Qualified Moving Expenses
     Form W-2: Box 12 Code P
      ○ i.e. P 1200.00

   Non-Qualified Non-Deductible:
     Form W-2: Box 1 , 3, and 5
Relocation Reimbursement
UTSA Relocation Reimbursement
 Relocation Authorization
 Relocation Limit
 Reimbursement Criteria
 Relocation Reimbursement Payment
UTSA Relocation Amount
 Vice-President Level Authorization
 Vice-President may delegate
     Delegation of Authority Memo
UTSA Relocation Amount Limit
 10% of Computed Annualized Salary of
  the prospective employee
 Not required to offer Relocation
  Reimbursement, nor to the employee
 Exception to 10% Limit:
     Approval by Vice President Business Affairs
     (or ) Approval by President
UTSA Relocation Reimbursement
 Qualified Transportation of Household
 Qualified Travel
 Qualified Lodging
 Meals*
 Pre-move House Hunting*
 Temporary Housing*
 Storage*
*Taxable Income to the employee
Relocation Payment Process
   Reimbursement Process: submit to Payroll
     Offer Letter of Employment (must contain Relocation
     Original Receipts
     Local Funds Voucher
      ○ Employee’s Signature
      ○ Account Signer Approval Authority
      ○ Vice-President Approval Authority (one of the following)
          On Offer Letter
          Email attached to Offer Letter
          Co-sign Local Voucher
          Delegation of Authority Memo on file with Payroll Office

   Direct Pay to Moving Company via P.O.
UTSA Relocation Reimbursement
   Questions?

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