2018 Tax Cuts & Jobs Act - Next Steps

January 15, 2018

 

Impact on Relocation in Brief

Moving Expenses** are no longer excludable or deductible, eliminating the need for prior IRS Move Criteria – (a) time test (b) distance test and (c) qualifying test

** Moving Expenses that were tax excludable/deductibe before 2018; now taxable include:

  • Household goods shipment
  • First 30 days of storage
  • Final trip expenses - lodging, airfare and mileage to the IRS tax excludable moving rate,

pet and automobile shipment

Home Sale Exclusion - No changes provided that the transaction is within current IRS guidelines

New Home Purchase Assistance - Previously tax-deductible and now taxable include

  • Points
  • Home loan interest and real estate tax portion on duplicate housing benefit
  • Deductions on mortgage debt limited to first $750,000 (before $1mm cap)

State and Local Tax Consideration:  mortgage interest and real estate taxes remain deductible up to $10,000 cap

Below-Market Interest Rates for Equity Advances: may be required to impute interest on the loan; taxable

Mortgage Subsidy Programs: with the loss of interest deduction, may be required to imputed as income; taxable

                Actions Recommended by HR&Relo Advisors

1)     Leadership to enroll all stakeholders – HR, tax, payroll, legal

2)     Determine how to address these changes; for example

  • Company parameters in place of IRS Move Criteria
  • Handling of additional tax liability
  • Relocations in process
  • Communication to in-process transferees

3)     Discuss policy and administrative options to offset cost and/or streamline

4)     Determine go-forward strategy, impact on talent mobility, budget

5)     Update relocation documents, template, systems (including payroll)

6)     Communicate to stakeholders, administrators, and transferees (in process and future)

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