IRS Clarifies Taxability of Moving Expenses Prior to 2018

With the passage of the Tax Cuts and Jobs Act, pastors can no longer deduct

With the passage of the Tax Cuts and Jobs Act, pastors can no longer deduct moving expenses. Still, many have wondered if the tax-free suspension applies to expenses earlier than 2018 but paid for or reimbursed in 2018. IRS Notice 2018-75, posted on IRS.gov in September, clarified that the tax-free suspension does not apply to reimbursements or payments made in 2018 for expenses incurred in a prior year, reported CapinCrouse.

CapinCrouse offered three additional insights: (1) payments or reimbursements must be for work-related moving expenses that would have been deductible to the employee if the employee had paid them before January 1, 2018; (2) the employee must not have deducted the expenses in 2017; and (3) if an organization has already treated employee reimbursements or payments as taxable, it can follow the normal tax adjustment and refund process.

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