Year End: Moving Expenses (Qualified & Non-Qualified)

Question to ask the client:

Is the moving expense taxable or non-taxable?

Taxable = Non-Qualified 

Non-taxable = Qualified

Non-Qualified Moving Expenses

Use for non-qualified moving expenses (pre-move house hunting expenses, temporary living expenses, expenses relating to a lease, settlement or sale of the old residence, the purchase or lease of a new residence, or meal expenses)

How to setup a Moving Expense – Non-Qualified earning code

Navigate to: Company Settings > Payroll Setup > Earning Codes

If the code isn’t already set up on the company, click "Add New Earning Code" in the upper right corner.

In the Roll up Earning box, select “Custom Taxable Fringe”. You should now see this box:

Select "OK"

Rename the Earning code accordingly and keep the W2 Box Type at the following setting:

Click "SAVE"

In the Tax Settings box, click "Add Tax Setting".  For Federal taxes, Moving Expenses are fully taxable.  Code accordingly:

Each state’s income tax, local tax, and worker’s compensation taxation varies – get the taxability from the client.

How to input in payroll

Because Moving Expenses – Non-Qualified are taxable, the amount needs to be recorded in a current payroll’s existing check.

Qualified Moving Expenses

How to setup a Moving Expense - Qualified earning code:

Navigate to: Company Settings > Payroll Setup > Earning Codes

If the code isn’t already setup on the company, click "Add New Earning Code" in the upper right corner.

In the Roll up Earning box, select “Reimbursement (Nontaxable Earning)”. You should now see this box:

Select "OK"

Rename the Earning code accordingly and keep the W2 Box Type at the following setting:

Click "SAVE"

No additional tax setup is needed.

How to input in payroll

Because Moving Expense - Qualified are non-taxable, the amount can be entered separately on a manual check.

YE Moving Expense Process Doc