To govern payments made to a new employee when a relocation/moving allowance would serve as a significant recruiting tool to help offset the new employee’s personal costs of relocation to work at the University and to ensure departments communicate tax implications to employees and comply with state and federal tax laws.
Payment – The payment is treated as wages and paid through the payroll process. The amount the employee will receive will be net of applicable taxes (e.g., income taxes, Social Security, Medicare and other applicable taxes) which are deducted from the total amount stated in the offer letter.
Wage Types – The relocation/moving allowance must use wage type 2600 and GL 511316. The temporary housing allowance must use wage type 2090 and GL 511315. Both must be paid through the University’s payroll system.
Relocation/moving allowances are not an entitlement and will not be authorized in all circumstances. When it is in the best interest of the University, within the funds available, the University may provide a relocation/moving allowance payment for an employee to move from one location to another. This policy applies to all moves regardless of the dollar amount.
The relocation/moving allowance payment may be offered to assist with relocating 50 or more miles from the employee’s most current permanent domicile to the primary work location required for their UK work assignment.
Departments may also limit moving allowances to less than the maximum amount allowed by policy. UKHC has a central approval process, which will remain in place.
The relocation/moving allowance must be stated in the offer letter and is intended to be used for and should encompass house hunting, packing and transporting goods, storage all travel associated with the employee’s relocation. Additionally, a college or department may provide a temporary housing allowance. The amount of the temporary housing allowance must be stated in the offer letter and must not exceed $1,500 per month for a maximum of three months.
With the enactment of the Tax Cuts and Jobs Act of 2017, relocation/moving allowances to employees during calendar years 2018 through 2025 will be treated as wages and paid through the payroll process. Income taxes, Social Security, Medicare and other applicable taxes are deducted from the total amount stated in the offer letter and provided to the employee. The payment the employee will receive will be net of applicable taxes. These payments are not subject to retirement contribution.
Since the University offers a relocation/moving allowance rather than reimbursing actual expenses, payments under this policy cannot be charged to sponsored projects unless the funding agency outlines specific requirements to be met for the charges to be allocable.