IRS Notice 2018-75, released on September 21, 2018, states that qualified moving expenses that were previously excluded from an employee’s taxable income would remain nontaxable to the employee if the expense was incurred prior to January 1, 2018, and would have been deductible as a qualified moving expense if payment had been received by the individual prior to January 1, 2018. This new guidance from the IRS should result in a tax savings for the employer on all employer paid tax assistance on the impacted expenses.  The amount of savings depends on the level of assistance provided by your policy benefits and the taxing authorities involved for each move.

Cornerstone is in process of identifying the impacted 2017 / 2018 transactions for our clients that were reported in tax year 2018 as taxable.  Adjustments will be reported for wages and tax assistance before each client’s 2018 year-end is finalized.

The 2018 Tax Cuts and Jobs Act (TCJA) , which was effective January 1, 2018 remains in force through December 31, 2025.  The taxability of expenses remains unchanged except for the changes noted above by IRS Notice 2018-75.  Only those expenses for moves that occurred in 2017 are impacted by the new IRS notice.  Relocation expenses incurred for moves that occurred in 2018 will continue to be taxable.

Below is a link from the Worldwide Employee Relocation Council® (ERC) regarding their review on this topic:

Worldwide ERC® posted the following:

U.S. IRS Says 2018 Reimbursements for 2017 Moves are Tax Free