2018 Tax Policy Changes

On December 22, 2017, Tax Cuts and Jobs Act (P.L. 115-97) was signed into law, resulting in changes to university policies on paying for relocation expenses and giving gifts to employees.

Relocation Expenses Must Be Reported as Federal Taxable Income

  • Effective January 1, 2018, all employer-provided relocation expenses, including moving expenses paid directly to a third party (e.g. a moving company), must be reported as federal taxable income, subject to income tax and FICA withholding.
    • The State of California has not issued guidance conforming to new federal laws. As a result, California wage income will only be adjusted in accordance with prior tax law.
  • Relocation expenses will continue to be tracked and reported through travel expense vouchers. Additional campus directives will be developed and communicated to administrative staff.
  • Taxable Wages - Employer Paid Relocation Expenses (.pdf)

Some Gifts to Employees Must Be Reported as Taxable Income

  • Report gift cards, parking permits for one month or more, and transit passes given as gifts to recognize length of service as taxable income. Effective January 1, 2018, gift cards, one-month parking permits, and transit passes given to employees in recognition of length of service or safety achievement must be treated as wage income subject to income tax and FICA withholding. In these instances, these gifts are now considered cash equivalents. Tax reporting is required on these types of gifts in any amount, superseding previous policy thresholds.
  • How to report taxable gifts to Tax Reporting and Compliance. 
    Instructions on reporting gifts as taxable income and guidelines for gift giving are available at Tax Reporting and Compliance Forms.
  • Gift cards with minimal value excluded from income tax reporting. At this time, in accordance with UC Office of the President guidance, recognition awards provided by gift cards with minimal value ($75 or less) may be excluded, following existing guidelines of no more than three per fiscal year.
  • These gift cards must comply with all policy limitations and requirements and may be excluded from income tax reporting if the employee does not receive more than three within the calendar year.

Additional Policy Updates

  • Further revisions to UC policies related to the tax reform legislation are pending guidance from the IRS and the California Franchise Tax Board.
  • Unrelated to the tax reform act, Office of the President revised the Policy and Regulations Governing Moving and Relocation (BFB-G13 - for MSP/PSS positions) effective October 15, 2017, to allow the university to reimburse a new appointee for costs associated with selling a former residence or settling an unexpired lease. The policy defines limits and eligibility criteria. Reimbursement of these new expense categories will require chancellor’s approval. Policy revisions also include the elimination of relocation allowances and a requirement to submit reimbursement requests within 60 days of payment.

Links to policies:

Questions

Please direct questions to the Tax Reporting and Compliance Team at afs-trcmail@ucdavis.edu.