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)