What Changes Has the IRS Made to Moving Expense Reimbursement?

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The IRS recently announced that employer payments or reimbursements in 2018 for employees’ moving expenses that happened prior to this year are excluded from wages for income and employment tax purposes.

The Tax Cuts and Jobs Act (TCJA) suspended the income exclusion for moving expenses reimbursed or paid by an employer for most employees starting in 2018. That makes the amounts taxable for everyone except active-duty service members whose relocations are connected to military-ordered permanent changes of station.

The recently posted announcement also covers employer payments to moving companies in 2018 for qualified relocation services provided to an employee in 2018.

To qualify, reimbursements or payments must be for work-related moving expenses that would have been deductible by the employee if they had directly paid them prior to Jan. 1, 2018. The individual must not have deducted them in 2017. For more information on the 2017 rules, see Form 3903 or Publication 521.

Employers who have already treated reimbursements or payments as taxable can follow the normal employment tax adjustment and refund procedures. See Publication 15, section 13, or Form 941-X and its instructions for details.

Updates on this and other TCJA provisions can be found on the IRS website.

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About Terry Sheridan

Terry Sheridan

Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.

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