All expenses paid directly to an employee or a third party to assist with moving personal items and relocation of the employee and their family members are taxable to the employee. The method of payment is determined by the Department issuing the payment.

The recommended method of payment is a one-time lump sum made directly to the employee, issued through payroll. This payment type will be taxed at the regular rate for FICA taxes and at a flat 22% for federal income tax.

If a third party vendor is paid directly, the amount will be added as a taxable fringe benefit on a future paycheck and this will be included in the taxable wages for that check so that the applicable FICA and federal income taxes can be withheld. Detailed information on how taxes are calculated for regular paychecks can be found on the Payroll Services website here.