Relocation Tax Changes

Significant relocation tax changes started on January 1, 2018. The new Tax Cuts and Jobs Act of 2017 requires that the amount paid for household goods relocation, related storage, and the trip to the final destination be taxable income. This only is in effect if the employer pays the costs of the relocation.

Relocation expenses are now added to the employee’s taxable income. Employees will be responsible for paying the federal taxes on the relocation. House-hunting trips, temporary housing, household goods moving, and household goods storage are taxable.

Changes from the Act have caused companies to “gross-up” taxable dollars. A gross-up is when an employee receives a one-time tax relocation reimbursement of taxable relocation costs. If a company does not “gross-up,” those tax dollars are due from the employee immediately.

At Lawrence Relocation, we know the importance of understanding your relocation process. It’s essential for relocating employees to understand how taxes will affect their moves. If you have questions about the new relocation tax changes, contact our friendly relocation experts.

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