The new Moving Expense Deduction Rules will affect many taxpayers. Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, a taxpayer would generally qualify for moving expense deduction if the new work location meets the distance test from the former home, and the taxpayer works a certain amount of time during the first one or two years in the new location.
However, the TCJA changed the rules. TCJA suspends the Moving Expense Deduction for tax years after 31 December 2017 and before 1 January 2026. One point to note is that if the taxpayer moved in 2017 and the employer reimbursed in 2018, the taxpayer will not be taxed on the reimbursement in 2018.
The only exception set forth by TCJA is for certain members of the Armed Forces. If the taxpayer is a member of the Armed Forces on active duty and the move is because of a permanent change of station, they may qualify for the Moving Expense Deduction.
Companies that plan to send their employees on global assignments may need to take this into consideration when negotiating the assignment package with their employees.
If you believe the above measures may impact your business or require any advice with respect to US taxation, please contact Marco Chong a mchong@pkfod.com or call +1 646 699 2859.
