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March 7, 2019

US Expats Moving Expenses Can No Longer Be Deducted and If Paid for by Employer it is Taxable Income to Recipient

For businesses that have employees, there are changes to fringe benefits that can affect a business’s bottom line and their employee’s tax liabilities. One of these changes is to qualified moving expenses.
Under previous law, payment or reimbursement of an employee’s qualified moving expenses were not subject to income or employment taxes.
Under last year’s tax reform legislation, employers must include all moving expenses, in employees’ wages, subject to income and employment taxes.

Exception

Generally, members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income if:
  • They are on active duty
  • They move pursuant to a military order and incident to a permanent change of station
  • The moving expenses would qualify as a deduction if the employee didn’t get a reimbursement

Transition rule

There is a transition rule under the new law. Under this rule, certain payments or reimbursements aren’t subject to federal income or employment taxes. This includes amounts that:
  • An employer pays a third party in 2018 for qualified moving services provided to an employee prior to 2018.  
  • An employer reimburses an employee in 2018 for qualified moving expenses incurred prior to 2018. 
To qualify for the transition rule, the payments or reimbursements must be for qualified expenses which 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.

We can help you with your US Federal and State Tax Returns. We know all of the special rules for US expatriates and the changes made by the recent tax  law.  Email us at taxmeless@gmail.com for assistance and your tax return preparation. We have specialized in expatriates for over 20 years. Download our 2018 tax return questionnaire for expatriates. Send it to us afrter filled out and we will provide you with a fixed fee quote.


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