The Tax Cuts and Jobs Act has suspended the exemption for certain reimbursements of moving expenses and the deduction allowed for non-reimbursed expenses.

Prior Law

Through December 31, 2017

Under pre-Act law, employees could exclude qualified moving expense reimbursements from their gross income and from their wages. These were any amount received (directly or indirectly) from an employer as payment for (or reimbursement of) expenses which would be deductible as moving expenses.

Taxpayers not reimbursed could claim a deduction expenses incurred in connection with starting a new job if the new workplace was at least 50 miles farther from a taxpayer’s former residence than the former place of work.

New Law

Effective for tax years beginning after December 31, 2017

The exclusion for qualified moving expense reimbursements is suspended, except for members of the Armed Forces on active duty (and their spouses and dependents) who move pursuant to a military order and incident to a permanent change of station.

The deduction for moving expenses is also suspended, except for members of the Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station.

Commentary

Although this exclusion/deduction was not used by many taxpayers, it was used by those moving to offset some costs of moving. It was also used as a way to entice a new employer. The new employer can still offer this as a benefit, but it will need to be added to wages as additional compensation.

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Jeff Dvorachek
Jeff Dvorachek
I joined Hawkins Ash CPAs in 1998. I am the partner-in-charge of the Manitowoc, WI, office and tax director for the firm. I have thorough experience providing tax services to individuals, commercial businesses, nonprofit entities and estates and trusts. I also provide compilation and review services. I lead the Tax Committee and am a member of the Information Technology Advisory Committee.

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