Moving Expense Coverage by the Company

[mkadivar]

I moved from San Jose, CA to Moreno Valley, CA for a new job. The company that hired me is supposed to pay for my move and requested me to expense it in my tax. They were paying up to $2500 for the move. Please advise how to proceed on filing the expense for my tax return! thanks

[dclick]

Thanks for reaching out to us today. Hope your move goes smoothly!

The Tax Cuts and Jobs Act of 2018 revamped how moving expenses were treated (reimbursements and payments towards these amounts as well). 

I'll first address any reimbursed expenses and then any non-reimbursed expenses.

Qualified Moving Expenses Reimbursements No Longer Excluded from Employees’ Income, with Two Exceptions

For 2018 through 2025, employers must include moving expense reimbursements in employees’ wages. The new tax law suspends the exclusion for qualified moving expense reimbursements.

Exception 1: 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 move expenses would qualify as a deduction if the employee didn’t get a reimbursement

Exception 2: Employers may exclude from wages any 2018 reimbursements to or payments on behalf of employees for moving expenses incurred for a move that took place prior to January 1, 2018, and which would have been deductible had they been paid prior to that date. See Notice 2018-75

So these amounts will all be included as taxable wages for the year. 

Here is an IRS Page on the topic, created to handle the transition from 2018 and before to 2018 and beyond treatment of these items:

https://www.irs.gov/newsroom/employer-update

Additionally, there is no deduction for out of pocket expenses you pay towards the move that are unreimbursed any longer. Here is a wonderful TurboTax article on the topic:

https://turbotax.intuit.com/tax-tips/jobs-and-career/guide-to-irs-form-3903-moving-expenses/L6CwmGm3...

At the state level, California is one of the few that still allows moving expense deductions:

If you moved in connection with your job or business or started a new job, you may be able to take this deduction. But your new workplace must be at least 50 miles farther from your old home than your old home was from your old workplace. If you had no former workplace, your new workplace must be at least 50 miles from your old home.

For more information, see IRS Publication 521 (PDF), Moving Expenses.

For California, use FTB Schedule CA (540) (PDF), California Adjustments to deduct moving expenses along with the IRS Form 3903 (PDF), Moving Expense.

These will be disallowed on your Federal Return but allowed on your California State Return. TurboTax can walk you through it on your state return when it comes to entry. 

I hope this helped, and thanks again for reaching out!

-Dennis