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Moving expense deduction to be suspended next year

On Behalf of | May 16, 2018 | Internal Revenue Service

If you are poised to move because of a new job, or transfer within the same company, you may be curious about what expenses may be tax deductible in the next tax year. After all, moving expenses have been a long-standing deduction that employees and small business owners have traditionally taken advantage of.

However, the moving expenses deduction will be suspended until 2025 as a result of the latest tax reform act. Specifically, the Tax Cuts and Jobs Act (TCJA) that was signed into law last December will not allow this deduction beginning with the 2018 tax year. The new law also suspends the inclusion of employer reimbursed moving expenses into a person’s income.

What this means is that if you had out of pocket expenses reasonably related to a job-related move, you will not be able to deduct these expenses on next year’s tax return. Additionally, if you were reimbursed or provided money by an employer for purposes of moving, you will not be required to report such money as income.

The new tax rules allow an exception to both suspensions for active duty members of the Armed Forces who are required to relocate pursuant to a military order.

For those who relocated in 2017 and have not yet filed a tax return, the current rules for deductions apply as an “above the line” deduction. The distance and time tests apply as to whether such expenses may be deductible. Additionally, not every expense related to relocation may be deductible.

If you have questions about the tax implications of moving, an experienced tax attorney can advise you.

The preceding is not legal advice.


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