The Tax Benefit from Moving Expenses Has Departed

Have you changed jobs recently and moved far enough to deduct your moving expenses on page one of your Form 1040? Better yet, did you take a new job and your new employer paid for all or most of your moving expenses?

The deduction or tax-free payment of moving expenses was a pretty sweet deal. It was – past tense – because these benefits all went away on January 1, 2018. Previously, an individual could take an above-the-line tax deduction subject to a couple of requirements if they moved for a new principal place of work. The Tax Cuts and Jobs Act eliminates that deduction for years 2018 through 2025 (except for members of the Armed Forces).

Employers were also able to pay moving expenses directly to vendors, or through reimbursements to employees, for required moves meeting certain criteria and there was no tax impact on the employee. Now, if these amounts are paid, they will be included as taxable income on the employee’s W-2 form.

A couple of key takeaways as a result of this change:

  • The income taxability of moving costs paid by employers effects income taxes as well as self-employment taxes for ministers.
  • There is no exception for foreign moves so missionary relocations will be impacted.
  • Organizations may want to consider grossing up the taxable benefit to help reduce the tax consequences for employees. 

For more information on Tax Reform and its implications for churches and nonprofits, please consider attending one of the free, in-person National Forums on Tax Reform and/or watching our free Tax Reform Webinar-on-Demand.

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.


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