One of the advantages of being the only workforce mobility company with its own internal tax practice is that we can very quickly and expertly advise our clients on IRS rulings and guidance that will impact their programs. On the heels of the whirlwind that was the 2018 Tax Cuts and Jobs Act (TCJA), we once again find ourselves advising clients on a mobility-related tax matter.
Last Friday, the IRS issued a statement regarding reimbursements of moving expenses, clarifying some of the terms of the TCJA as they apply to work-related moves. To put it simply — and we know that when it comes to tax-related issues, “simply” is very much a subjective term — moving expenses previously excluded by employers from taxable income associated with shipment of household goods, storage expenses and final move travel would remain nontaxable if paid in 2018 for an employee move that occurred in 2017.
This information is welcome news for companies with US-touching relocations as it creates a notable exception to the TCJA and carves out these residual expenses from 2017 moves that would have otherwise been taxable under the reform. With the majority of companies across our client base grossing-up these expenses, this will result in a savings of applicable Federal, FICA and FUTA (Federal Unemployment) taxes.
For a closer look at IRS Notice 2018-75 and how it could impact your company’s relocation program, Marianne Schmidt, VP of Domestic Tax Services, and I have written a detailed advisory. You can download it here.
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