Financial Services Manual (FIN)

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Effective: 5/1/1996

Revised: 03/01/2017

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FIN 420–03: Moving Expenses

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To describe the policy for reimbursing faculty and staff moving expenses

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Internal Revenue Service
University policy

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ASU will, at the discretion of each vice president, reimburse reasonable and appropriate moving expenses for faculty and staff (e.g., moving household goods and personal effects and traveling to their new home). Any expenses related to ASU employees’ household moving expenses (7390 36 Moving expenses—employee household) are prohibited on state accounts. Generally, moving expense reimbursement is restricted to new faculty and staff who meet the Internal Revenue Service qualifying tests for deductibility, although there may be limited exceptions. Each vice presidential area will determine eligibility for moving expense reimbursement and the maximum amount of reimbursement. Each vice presidential area also will determine the types of moving expenses that will and will not be reimbursed. Moving expense authorization and amount must be specified in the employment offer letter signed by the hiring official or a higher authority. To avoid confusion on the part of the new hire, the offer letter should make clear the maximum amount of the moving expense allowance and that it is a reimbursable allowance. Hiring departments providing moving expense reimbursements should refer new hires to this policy.

Reimbursements for authorized travel expenses during the recruitment process are not taxable to the prospective employee. Reimbursement of personal travel expenses (such as house-hunting trips) incurred by the new employee after an offer of employment has been accepted, but before the actual move, are taxable to the employee. The reasonableness of the moving expense reimbursement is determined through the application of the following criteria:

  1. The maximum amount of moving expense reimbursement authorized is indicated by an employment offer letter issued by ASU and/or acknowledgment of acceptance of employment.
  2. Since ASU is a political subdivision of the State of Arizona, the moving expense reimbursement must be an appropriate use of university public funds. Reimbursement of personal expenses, such as family vacation costs or excessive meal and lodging costs while en route to ASU, are not an appropriate use of university funds.

ASU is required by the Internal Revenue Service (IRS) to report moving expense reimbursements made to employees. To determine whether the reimbursement is reportable as taxable or not taxable to the employee, two factors are considered. The first is whether the move meets the IRS deductibility tests:

  1. The new workplace must be at least 50 miles farther from the employee’s old home than the old workplace was.
  2. The employee must work full-time in the general area of the new workplace for at least 39 weeks during the 12 months right after the move.

If either qualifying test is not met, the moving expenses are considered nondeductible and any reimbursement made by ASU is considered taxable income to the employee and will be reported to the IRS. If both qualifying tests are met, the next step is to look at the type of expense to determine deductibility. The IRS identifies certain moving expenses as deductible and all others are nondeductible. Reimbursement of deductible expenses is not taxable income. Examples of deductible and nondeductible expenses are provided in the next section. Additional information is available in IRS Publication 521, “Moving Expenses,” which may be obtained by calling the IRS at 1–800–829–3676 or from the IRS Web site (

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Direct Payments Made by ASU to Moving Companies

Departments can make direct payments to moving companies as long as the payment being made is for the transportation of a new employee’s household goods and personal effects. Payments up to $5,000 do not require a purchase order and may be paid for by using a Payment Voucher (PV) or purchasing card; payments greater than $5,000 require that a purchase order be issued. The PV or requisition must be coded to 7390 36 with the employee’s name and ASU identification number referenced and all relevant purchasing procedures followed. Under IRS regulations, qualified moving expenses paid by an employer directly to a moving company on behalf of the employee are not reported on the employee’s annual IRS Form W-2.

Purchasing and Business Services maintains contracts with national moving companies. These contracts offer discounts on household goods shipments and on storage in transit. They also provide free replacement value insurance, rebates for late pickup or delivery, and guaranteed price estimates.

If an ASU-approved moving company cannot handle the move, a minimum of two estimates needs to be obtained from other moving companies and forwarded to Purchasing and Business Services by the employee’s department for approval prior to engaging the moving company. D

If moving expenses are $5,000 or less:
Department paying for move
  1. Prepare a PV coded to 7390 36, with all applicable support attached, including a copy of the signed offer letter. Forward the PV to Payables and Reimbursements.
Payables and Reimbursements
  1. Process the PV.
If moving expenses are greater than $5,000:
Department paying for move
  1. Prepare an RX to an ASU-contracted moving company.
Purchasing and Business Services
  1. Issue a purchase order to the moving company.


Deductible Expense Reimbursement to the Employee

Reimbursement of the following deductible expenses may be made to the employee with a Payment Voucher (PV) coded to 7390 36. Only expenses incurred in the shortest, most direct route available are deductible. The deductible expenses are limited to those incurred within one year from the date the employee first reported to work. The deductible cost of transporting personal effects from a location other than the employee’s former home is limited to the amount it would have cost to move the items from the employee’s former home.

Items that may be reimbursed and not included in taxable income on the employee’s W-2, are:

  1. Transportation of household goods and personal effects:
    1. cost of a moving company (per “Procedures” above, the cost of using a moving company approved by Purchasing and Business Services may be direct-billed to ASU and paid directly to the moving company by ASU)
    2. cost of truck rental in a self-move situation
    3. actual fuel purchases in a self-move situation, or 17 cents per mile
    4. packing, crating, transporting, and unpacking of goods
    5. parking fees and tolls while in transit
    6. car shipping cost
    7. storage of household goods and personal effects for a period of up to 30 days.
  2. Travel to new household:
    1. airfare (coach)
    2. lodging only while in transit (this includes one night at the old location and one night upon arrival at the new location; lodging rates used by ASU employees for business travel and published on the Financial Services travel-related Web site are used as a guide for determining the reasonableness of the lodging rate reimbursed for moving expenses)
    3. actual fuel purchases, or 17 cents per mile
    4. parking fees and tolls while in transit
    5. cost of one trip to new home per household; household members need not travel at the same time.
  3. Other deductible moving expenses per IRS Publication 521, “Moving Expenses.” See “Policy” above for instructions on obtaining publication.

Supporting documentation, including original, itemized receipts, a completed and signed Employee Moving Expenses Reimbursement Worksheet, and a signed offer letter needs to be attached to the PV and forwarded to Financial Services. To help expedite the reimbursement process, an optional Moving Expense Optional Information Sheet and Moving Expense Worksheet Instructions are available on the Forms Page of the Financial Services Web site to assist in worksheet preparation. D

Employee seeking reimbursement
  1. Complete Sections A and C of the Employee Moving Expenses Reimbursement Worksheet and attach original itemized receipts. Complete the optional Moving Expense Optional Information Sheet to explain the details.
Department making reimbursement
  1. Prepare a PV coded to 7390 36, with all applicable support attached. Forward to Financial Services or West campus Business Services with the Employee Moving Expenses Reimbursement Worksheet and a copy of the signed offer letter authorizing moving expenses.
Financial Services/West campus Business Services
  1. Review and approve the Employee Moving Expenses Reimbursement Worksheet and forward to Payables and Reimbursements along with the PV and a copy of the signed offer letter.
Payables and Reimbursements
  1. Process the PV.


Nondeductible Expense Reimbursement to the Employee

Nondeductible moving expenses are considered additional compensation to the new employee and must be processed through the payroll process of Payroll Services. Additional compensation payments made for nondeductible moving expenses are prohibited on state accounts. The nondeductible moving expense will be taxed at a tax rate of approximately 42 percent (includes federal and state income taxes and Social Security and Medicare taxes). All non-state agency/organization authorizing reimbursement of nondeductible expenses will incur applicable employee-related expenses (ERE) totaling approximately 8 percent of the nondeductible reimbursement amount.

Reimbursed nondeductible moving expenses will be included, net of taxes, in the employee’s next regular paycheck. However, in instances where the offer letter indicates that reimbursements will be made on an after-tax basis, the nondeductible moving expenses will be included in the employee’s next regular paycheck on an after-tax basis. It will also be reported as additional compensation on the employee’s annual IRS Form W-2 in Box 1.

Below are examples of taxable, nondeductible moving expenses that will be reported as federal wages on the employee’s W-2:

A. One pre-move house hunting trip—generally limited to one week in duration

  • Airfare, rental car, fuel purchases, meals and lodging permissible with appropriate receipts. Lodging reimbursements are limited by the applicable per diem rates used by ASU.

B. Travel of household excluded from non-taxable, deductible expenses:

  • Meals for family while in transit will be reimbursed based upon actual itemized receipts. Meals reimbursement will be limited to what is reasonable and appropriate to the travel circumstances. Meal per diem amounts may be claimed without receipts. Per diem rates can be found in FIN 501, “ASU Travel Policy.”
  • Mileage in excess of 27.5 cents per mile may be reimbursed as long as the total taxable and nontaxable mileage rate does not exceed 44.5 cents per mile.
  • Temporary housing expense after first night of arrival; period not to exceed one month. Temporary housing expenses for a period greater than one month must be included in the employment offer letter and also must advise the new employee that the value of the housing will be taxable to them as wages for employment and income tax withholding and reporting purposes. If the offer of temporary housing expenses is not included in the offer letter, subsequent approval at the VP level must be obtained. The Tax Unit of Financial Services must be notified of the payment of temporary housing expenses through the Moving Expense Reimbursement worksheet and optional information sheet process described herein.

C. Miscellaneous

  • Car rental on arrival while personal vehicle is being shipped is limited to one week.
  • Return trips to a former home location to conclude personal business, such as selling the home, are nondeductible.


Employee seeking reimbursement
  1. Complete Sections B and C of the Employee Moving Expenses Reimbursement Worksheet and attach original receipts. Complete and attach the optional Moving Expense Optional Information Sheet as needed.
Authorized agency/organization signer
  1. Review the reimbursement request package and determine whether the request meets guidelines set by the authorizing vice presidential area; complete and sign Section D of the worksheet; and forward the worksheet and documentation to Financial Services or West campus Business Services, along with a copy of the offer letter authorizing moving expenses or comparable authorization when not specified in the offer letter.
Financial Services/ West campus Business Services
  1. Review Employee Moving Expenses Reimbursement Worksheet, approve, and forward to Payroll Services.
Payroll Services
  1. Process the nondeductible expense reimbursements on the next semi-monthly payroll as additional compensation.


Examples of nonreimbursable expenses that do not qualify as moving expenses include:

  1. side trips for recreation/vacation
  2. expenses associated with buying/selling a house
  3. automobile registration costs
  4. temporary housing (more than one month)
  5. costs related to immigration
  6. loss of security deposits
  7. real estate expenses


  8. personal telephone calls, tips, movies, or other entertainment purchased during the move.

Any request for reimbursement that exceeds these guidelines requires the approval of the applicable VP area.

For expenses related to moving ASU offices/labs, use expenditure code 7390 39. Do not include these expenses on the Employee Moving Expenses Reimbursement Worksheet. Rather, they will be reimbursed as a university business expense through the accounts payable process.

If any moving expense reimbursements are contemplated that are not addressed above or you need additional guidance, please contact the tax unit in Financial Services at 480/965-9890.

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For more information on per diem rates, see FIN 501, “ASU Travel Policy.”

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