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2018 employer reimbursements for employee 2017 moves are generally tax-free

Posted on October 15, 2018


In another recent clarification by the IRS, employer payments or reimbursements received by the employee in 2018 for moving expenses incurred in 2017 may be excluded from the employee’s 2018 wages.

This clarification to the 2017 Tax Cuts and Jobs Act (TCJA), suspended the exclusion from income for moving expenses reimbursed or paid by an employer for most employees starting in 2018. This made these amounts taxable in 2018 (with the exception for active-duty members of the U.S. Armed Forces moving to a military-ordered change of station).

As with any new ruling, caution the CPAs at Teipen Selanders Poynter & Ayres, accurate record-keeping is critical. To qualify, reimbursements must be for work-related moving expenses that would have been deductible by the employee if the employee had directly paid them prior to Jan. 1, 2018.

If you are an employer that has already set up reimbursements or payments as taxable, the TSPA team can help you complete an employment tax adjustment and refund procedure for the applicable 2018 quarter. As always, we want to help you and your employees get every tax break possible.