Moving expenses for health related move

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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 and then any Medical items.

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...

Medical Items:

If your move was into an assisted living facility or numerous upgrades for medical reasons were required, or equipment purchases you may be able to deduct these on Schedule A of your 1040 as itemized deductions if they exceed 7.5% of your Adjusted Gross Income and you choose to itemize.

The IRS has a publication on the various items that qualify as well:

https://www.irs.gov/publications/p502 

Also, there is an expense eligibility checker:

https://www.irs.gov/help/ita/can-i-deduct-my-medical-and-dental-expenses 

I hope this helps, as these can be quite major expenses and can result in very high deductions, as long as they exceed 7.5% of your Adjusted Gross Income. I'd recommend keeping good records of the amounts paid to report on your 2021 taxes.

-Dennis

-Dennis