Tax: Travel & Moves
IRS announcement on Mileage rates:
Beginning on Jan. 1 2016 the standard mileage rates for reimbursement for the use of a car (also vans, pickups or panel trucks) will be:
- 54 cents per mile for business miles driven
- 19 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The mileage rates are set by the IRS and are expected to change each year. Please be sure you're using the correct rate.
Travel Reimbursement Procedures for students: The travel cost reimbursement is usually treated as an unqualified travel scholarship (IRS Pub 970) . Mandatory tax withholding from the travel reimbursement amount is done for foreign students who are non-residents for tax purposes (IRS notice 87-31), and a 1042-S tax form is issued at year end. No withholding or reporting is required for US students and foreigners who are residents for tax purposes, but those students are reminded a travel scholarship is taxable income and should be reported on their personal tax return.
Two exceptions to the 'scholarship' classification of travel expense reimbursement exist in the IRS regulations. 1) a student worker who is traveling in their NMT employee role (IRS code section 62) ; 2) a student travels as a member of a team for purposes of a competition. These costs are handled under the accountable plan. The travel cost is the university's business expense, and not 'income' to the traveler. An example is a research assistant who travels to present NMT's research at a conference; or an individual who has received a scholarship for service and has travel requirements in their job duties; or an engineering student who travels to compete in a bridge building competition.
Please complete the foreign student travel questionnaire on the Travel office web page and submit it to the Travel department with the travel request form: http://www.nmt.edu/nmt-travel-office
Travel Reimbursement Procedures for vendors and guests: Non-employee Travel Reimbursement Form . Forward the completed form to the travel office. The procedures to follow for vendors and NMT guests are documented here:Non-employee Travel Procedure
When the traveler is a foreigner, the Foreign National Data Sheet for Visitors must also be completed and forwarded to the federal tax compliance manager :Foreign National Data Sheet for Visitors
Travel Reimbursement for Job Applicants: Under IRS ruling 63-77, interview expenses for a job applicant are not considered income to the individual when the reimbursement does not exceed the actual expenses. The travel cost is covered under the accountable plan. This applies equally to US citizens and foreigners. Complete the non-employee travel form.
Contact the Federal Tax Compliance manager on ext 5984 with questions on when travel payments are considered taxable income.
Procedures:The department Vice Presidents administer the employee move policy for activity in their department. The departmental coordinator is responsible for communicating procedures to the new employee for the steps in the reimbursement process. The departmental accountant is responsible for coordinating the issuance of advances, where the advance is part of the benefit offered to new employees.
To issue an advance to the new employee, a Direct Payment form (DP) and backup documentation is required to process the expenses. An editable pdf version of a DP is located on the Accounts Payable page.
After the move, all employees shall present their receipts for move expenses and a signed version of the expense form (example is linked below) to the Federal Tax Compliance manager (Brown Hall, rm 100) within the timeline stated in the moving expense policy. Individuals in staff positions may receive an email defining the home move benefit instead of a formal job offer letter.
Documentation on advances and reimbursements for moving expenses are reviewed by the Federal Tax Compliance Mgr and then forwarded to the Payroll Department for processing. The employee receives the reimbursement funds on a regular paycheck.
Moving Expense Reimbursement Worksheet example This form is part of the backup to the DP and is required to either receive a reimbursement of expenses paid out, or to close out an advance. The employee will be given assistance from the Federal Tax Compliance manager to complete the reimbursement spreadsheet and identify any payroll tax liability that the employee has.
FAQ on home move expenses:
1. What individuals are covered under this benefit? Members of the employee's household are covered. That is anyone who has both the employee's former home and the new home as their home.
2. Can I claim the costs of moving two homes? You must identify your 'main home' if you have multiple residences. The personal transportation costs are reimbursed from your main home to your new job location at NMT. But the amounts paid for a professional moving service that moved goods from your 2nd home may be covered.
3. Am I going to be reimbursed for all my move expenses? The level of reimbursement varies with each employee. The benefit amount is specified in your job offer letter. It may be the actual cost with a not-to-exceed limit, or a lump sum amount.
4. Who pays the income tax on this benefit? The employee will have a tax liability if their benefit amount exceed the moving expenses allowed under the IRS guidelines in their publication 521 - Moving Expenses. Each employee must complete the Moving Expense Reimbursement Worksheet (see the example linked above). This worksheet identifies the taxable amount of their home move benefit. Income, Social Security and Medicare taxes will be deducted from the employee's NMT paycheck for any of the move benefit that is classified as taxable income.
5. Do I have to report the move expenses on my personal tax return? It depends. Please see IRS publication 521 to determine what to report on your tax return. The W-2 form you receive from NMT will report your home move reimbursement amount. It is important to note that qualified moving expenses you incurred that are larger than the amount covered under your employee benefit may be able to be claimed as a deduction on your tax return. Consult your tax advisor for assistance.