Reimbursements for pre-2018 move paid after 2017 may be excludible

Tax Hot Topics newsletterThe IRS provides in Notice 2018-75 that employer reimbursements made after 2017 for qualified moving expenses for a move that occurred prior to 2018 will be excludible from income. This exclusion specifically applies to any amounts directly or indirectly received by an individual in 2018 from an employer for qualified moving expenses that satisfy the requirements of Section 132(g)(1). Under the Tax Cuts and Jobs Act, the exclusion for qualified moving expense reimbursements from income is suspended for taxable years 2018 through 2025 (except for certain moves by active duty members of the armed forces).

For employers that have already included qualified moving expense reimbursements in individuals’ wages for federal employment tax purposes and have withheld and paid federal employment taxes on these amounts, Notice 2018-75 permits employers to use the adjustment process under Section 6413 or the refund claim process under Section 6402 to correct the overpayment of federal employment taxes on these amounts. Practitioners may also refer to Rev. Rul. 2009-39 and IRS Publication 15 (Circular E) for additional guidance on federal employment tax adjustments.

Jeff Martin
Partner, Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director, Washington National Tax Office
T +1 202 521 1554

James Sanchez

Senior Associate, Washington National Tax Office
T +1 202 861 4107

Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.