Employer payments or reimbursements in 2018 for employees’ moving expenses incurred prior to 2018 are excluded from the employee’s wages for income and employment tax purposes.
The Tax Cuts and Jobs Act of 2017 ( P.L. 115-97) suspended the exclusion from income for moving expenses reimbursed or paid by an employer for most employees starting in 2018, making these amounts taxable, except for amounts for active-duty members of the U.S. Armed Forces whose moves relate to a military-ordered permanent change of station. However, reimbursements an employer pays to an employee in 2018 for qualified moving expenses under Code Sec. 132(g)(1) that are incurred in a prior year are not subject to federal income or employment taxes. The same is true if the employer pays a moving company in 2018 for qualified moving services provided to an employee prior to 2018.
To qualify, reimbursements or payments must be for work-related moving expenses that would have been deductible by the employee under Code Sec. 217 if the employee had directly paid them prior to Jan. 1, 2018. The employee must not have deducted them in 2017.