Employers may ask employees to move to a different company location. If the employer pays a third party or reimburses the moving employee for actual costs incurred, there is no reportable income to the employee. This applies only if the employee's new workplace is at least 50 miles further from his or her residence than the former workplace; and the employee must work out of the new location for at least 39 weeks during the 12-month period following the move. Otherwise, the move transaction will have the appearance of being a simple compensation by the employer to the employee, who uses the funds to move to a new location while still working at the same place.

If the employer pays the employee a fixed amount to complete the move, and if the actual expenses incurred are less than the payment, then the difference is reported as income to the employee.

Example. The Fragrant Perfume Company asks its lead software developer to move to New York City, where she can create a new logistics system for herbs being shipped through the New York port facilities. The new location is 250 miles away from her previous position at company headquarters. The company pays her $20,000 to complete the move, against which she can substantiate incurred expenses of $16,000. The difference of $4,000 is gross income, from which the company must deduct payroll taxes.