The TCJA now requires employees to pay taxes on employer-paid relocation expenses, as the act considers paid expenses or reimbursement as taxable income.
What is typically included in moving expenses?
A core or typical job relocation package usually covers the costs of moving and storing furnishings and other household goods, along with help selling an existing home and costs incurred house hunting, temporary housing if necessary and all travel costs by the employee and family to the new location.
How do I estimate moving expenses?
You can use a moving costs calculator or the following formula:
- (Hourly rate) X (Number of movers) X (Number of hours to complete the move) + (Travel fee) + (Charges for additional services and packing materials you have requested)
- Good to know: Most local moving companies have a minimum charge of 2-4 hours.
Do you have to pay taxes on employee moving expenses?
How to Reimburse Employees for Moving Expenses . In general, any payment you make to employees is taxable, and paying employee moving expenses is considered a taxable benefit. The 2017 tax law didn’t change this tax situation.
Why do employers pay for employee relocation expenses?
Relocating for business reasons can be difficult—and expensive—for an employee. That’s why many employee moving expenses are paid by employers.
How much do companies pay to move employees?
For example, a company may be willing to pay $5,000 to each employee to help with moving costs. Another common strategy is that the company simply offers to reimburse employees for certain moving expenses, such as the cost of hiring movers, renting a storage unit and living in temporary housing.
Can You claim GST on moving expenses for an employee?
If you do not reimburse, or only partly reimburse, an employee for moving expenses, the employee may be able to claim some of the moving expenses when filing their income tax and benefit return. Include any GST/HST that applies in the value of this benefit.
