Under the Tax Cuts and Jobs Act, all moving costs incurred in 2018 and reimbursed by an employer must be reported as income to the employee.
Through Notice 2018-75, the IRS has confirmed that reimbursements paid by an employer to an employee in 2018 for qualified moving expenses incurred in a prior year aren’t subject to either federal income or employment taxes. The same holds true if the employer pays a moving company in 2018 for qualified moving services provided to an employee prior to 2018.
To qualify, any reimbursements or payments have to be for work-related moving expenses that would have been deductible by the employee if the employee had directly paid them before Jan. 1, 2018. The employee must not have deducted them in 2017.
Employers that have already treated the reimbursements or payments as taxable events can follow the normal employment tax adjustment and refund procedures.
For more information on this topic, please contact Matthew Shiebler, CPA at Interactive Accountants, LLC.