skip to main content
X

Industries

Staffing

Benefit from our decades of experience providing advisory, audit, and tax services and discover how our deep client commitment, combined with unparalleled business accounting and consulting services, ensures your success.

RELOCATION EXPENSE REIMBURSEMENTS – NOW A TAXABLE FRINGE BENEFIT

February 27, 2019

RELOCATION EXPENSE REIMBURSEMENTS – NOW A TAXABLE FRINGE BENEFIT

Do you have current or new employees that you plan to reimburse for moving expenses? In the past, these payments were excluded from income and treated as a non-taxable for the employees provided they were reimbursed under an accountable plan and the relocation met the distance requirements.

With the new Tax Cuts and Jobs Act, the exclusion from income for moving expenses reimbursed or paid by an employer starting in 2018 and through Dec. 31, 2025 was suspended. This means those payments are now taxable to the employee as compensation. This provision does not apply to active-duty members of US Armed Forces who are required to move due to a permanent change of station.

When looking to relocate employees, know that the expense reimbursement may have an added cost. Employers will be required pay and withhold social security and Medicare taxes now that the reimbursement is deemed a taxable benefit.

To avoid confusion, you will want to let your employees know this is a taxable benefit to them prior to reimbursing them for relocating. What was once seen as an additional incentive to encourage employees to make a switch, may now become an unintended detriment and discourage those employees from leaving their current location. For help navigating this change and the many others in the Tax Cuts and Jobs Act, contact us in one of our many locations today.

Hide Firm Disclaimer

©2020 UHY LLP. ALL RIGHTS RESERVED.

UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP and UHY Advisors, Inc. are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY LLP and/or UHY Advisors (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

On this website, (i) the term "our firm", "we" and terms of similar import, denote the alternative practice structure conducted by UHY LLP and UHY Advisors, Inc. and its subsidiary entities, and (ii) the term "UHYI" denotes the UHY international network, in each case as more fully described in the preceding paragraph.