IRS Offers Guidance on Moves Made Before Tax Code Overhaul

From Payroll

February 7, 2019

By Jazlyn Williams and Jamie Rathjen

Guidance clarifying how employers may report reimbursements for moves that occurred before the tax code overhaul was provided Feb. 7 by the internal Revenue Service.

Additional guidance was provided for reporting qualified moving-expense reimbursements on the 2018 Form W-2, Employee’s Wage and Tax Statement, in a set of frequently asked questions and answers that was released Feb. 7 by the IRS.

The new tax law (Pub. L. 115-97) suspended the exclusion of some qualified moving-expense reimbursements from employee income, starting with tax year 2018. Qualified moving-expense reimbursements paid to active-duty members of the U.S. military remain nontaxable. Payments to employees and third-party moving services after Dec. 31, 2017, for moves that occurred before Jan. 1, 2018, also remain nontaxable.

Employers only may use Box 12, Code P, to report costs to relocate military personnel when a move is because of a military order and involves a permanent change of station, said Anna Gleysteen, an official in the IRS office of chief counsel.

Moves that are not the result of a military order still may be taxable, Gleysteen said during the agency’s monthly payroll industry teleconference. The monthly teleconference for early January was canceled because of the partial government shutdown, which started Dec. 22 and ended Jan. 25.

Employers may not use Box 12, Code P, of the Form W-2 to report 2017 moving expenses paid in 2018 because the code still is reserved for reporting qualified costs to move active-duty members of the U.S. military, the IRS said.

The guidance also addressed how employers are to handle for tax purposes moves that were started in 2017 but completed in 2018. Payments and reimbursements may be excluded from income to the extent that they would have been deductible to employees in 2017, and the expense must have been incurred before Jan. 1, 2018, which is when the new tax look took effect, the agency said.

“For example, if an employee moves household goods in 2017 but doesn’t travel to the new place of employment until 2018, the employee may exclude payment or reimbursement of the expenses for the movement of the goods but not the employee’s travel expenses,” the IRS said.

In other topics addressed during the teleconference:

•About 223 million employer-filed copies of Form W-2, Wage and Tax Statement, were processed by Feb. 1, down from about 234 million at about the same time last year, said Matt Newton, a Social Security Administration program manager.

The proportion of processed forms that were on paper was not immediately available, Newton said.

To contact the reporter on this story: Jazlyn Williams in Washington at jwilliams@bloombergtax.com and Jamie Rathjen in Washington at jrathjen@bloombergtax.com. To contact the editors responsible for this story: Michael Baer at mbaer@bloombergtax.com and Michael Trimarchi at mtrimarchi@bloombergtax.com.

Copyright © 2019 The Bureau of National Affairs, Inc. All Rights Reserved.


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