State Agencies Bulletin No. 1659

Subject
Tax Withholding on Moving Expenses for Tax Year 2018
Date Issued
June 26, 2018

Purpose

To inform Agencies of the suspension of the Federal exclusion for qualified moving expense reimbursements from employee’s income and the creation of a new Earnings Code that should be used for taxing moving expense reimbursements

Affected Employees

Employees who have moving expenses paid or reimbursed through the Statewide Financial System (SFS) in 2018

Background

Under the previous tax law, qualified employees could deduct the reasonable costs of moving expenses. The Federal Tax Cuts and Jobs Act signed into law on December 22, 2017 suspends the moving expense deduction for tax years beginning after December 31, 2017 through December 21, 2025. As a result, the cost of moving expenses must now be included in the employee federal taxable gross and applicable taxes must be withheld.

Moving expenses are not subject to New York State or Local withholding taxes.

Starting in January of 2019, moving expense reimbursements will be processed through PayServ. At that time, Agencies will no longer submit these transactions through SFS. Further instruction on this new business process will be provided in a future Payroll Bulletin. Agencies should continue to process moving expense reimbursements through SFS for the remainder of the 2018 calendar year.

Effective Date(s)

Administration paychecks dated July 11, 2018 and Institution paychecks dated July 19, 2018

OSC Actions

The Office of the State Comptroller (OSC) has created a new Additional Pay Earnings code, TMV (Taxable Moving Expense), to be used for taxing moving expenses paid or reimbursed by New York State through SFS.

OSC will insert a row on the Additional Pay page for each employee who received payment for moving expenses.

The inserted row on the Additional Pay page will be set up as follows:

Earnings Code: TMV
Effective Date: Last day of the month that the moving expense is paid in SFS and reported by the OSC Bureau of State Expenditures.
Goal Amount: The total moving expense payment made to the employee.
Earnings:
  1. If the moving expense payment was $1-$500, the taxable earnings amount will be the same as the payment amount.
  2. If the moving expense paid was greater than $500, the taxable earnings amount will be the amount of the moving expense divided by 5, and taxes will be withheld over 5 pay periods.
  3. The total moving expense amount will be populated in the goal amount field. Tax withholding on this amount will stop once goal balance equals goal amount.

At the end of the calendar the number of pay periods available to tax moving expenses will be reduced to ensure that the payments made in 2018 are taxed and reported in 2018.

After OSC enters the payment into the Additional Pay page, agencies will receive an email stating whether the payment will be taxed all in one paycheck or the amount that will be taxed over the 5 pay periods.

OSC will report the moving expense as income on the employee’s 2018 Form W-2.

Agency Actions

Agency Finance offices should continue to use their current process to submit the moving expense information through SFS as non-taxable.

Agencies must notify affected employees of the new taxability of this transaction immediately and the description that will appear on their paystubs.

Agencies should submit the transaction for moving expenses timely, so that the employee may utilize the maximum number of pay periods affecting their taxes, depending on the payment amount. (See chart in “OSC Actions” above.)

Query Available for Agencies

The following query will be available in PS Query for agencies to run: LOCKED_QUERY_53_TAX_MOV_EXP

This query will identify all employees who have a TMV (Taxable Moving Expense) row on the Additional Pay page and can be run at any time.

Output fields will include Employee Name, Empl ID, Empl Rcd, Dept ID, Earn Code, Earnings Amount, Goal Amount, Goal Balance and Check Date.

Tax Information

The TMV payment is supplemental taxable income and will be included in the employee’s taxable gross subject to employment taxes and income taxes.

Federal income tax withholding will be calculated using the Aggregate method.

The payment is not subject to New York State or Local taxes.

Questions

Questions regarding this bulletin may be directed to the Tax and Compliance mailbox.