What you need to Know about Employer Reimbursements for Moving Expenses in 2018 by Flor Escudero, CPA
The IRS recently clarified how employers should treat payments and reimbursements they make in 2018 for work-related moves that employees made in a prior year, in light of the new tax law.
The Tax Cuts and Jobs Act that the government quickly passed into law at the end of 2017 requires employers to treat moving expenses as taxable income to employees. However, when an employee receives reimbursement in 2018 for moving expenses they incurred in a prior year, they may treat those amounts as tax-free for 2018 federal income and employment tax purposes. The same is true if the employer pays a moving company in 2018 for qualified moving services provided to an employee prior to 2018.
This tax relief is not available for moves that occur in 2018 or later unless the employee is an active-duty member of the U.S. Armed Forces whose move is due to or related to his or her military service.
The new tax law makes a number of changes to how employers and employees may treat certain work-related expenses in 2018 through 2025. Taxpayers should meet with experienced advisors and accountants before the end of the year to plan accordingly.
About the Author: Flor Escudero, CPA, is a senior manager of Tax Services with Berkowitz Pollack Brant, where she provides domestic and international tax guidance to businesses and high-net-worth individuals. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at firstname.lastname@example.org.
Information contained in this article is subject to change based on further interpretation of tax laws and subsequent guidance issued by the Internal Revenue Service.