Tax Reform: Moving for a Job – It’s Not Good News

Early in my career, we moved twice due to the requirements of a job. When we were newly married, we moved from Boston to Brooklyn. We had a small apartment and didn’t have a lot of stuff. I connected with the “Art Movers” who moved furniture on the trip back from moving Art for museums between Boston and New York. The New York UJA Federation covered the moving expenses which cost about $500.

Two years later, a job took us to Montclair, NJ. Our movers were the 7 Santini Brothers, who follow the laws governing Interstate Commerce.  My best recollection is that the bill to move was around $3000 – with a 10% discount. If you move within a state, moving companies charge a combination of the number of boxes and furniture as well as by the hour for 3-4 guys who are moving your stuff. Between states, prices are governed by weight and distance.

And if you moved for a job and your employer didn’t reimburse you for moving expenses, you would be able to deduct the full cost of moving on your tax return.

So what’s the big deal about moving expenses?

I have been wondering about the impact of the “Tax Cuts and Job Act of 2017”. An earlier blog took a look at tax reform and charitable giving. Of course we really won’t know anything for sure until the end of the calendar year and we have statistics and analysis.

But what we do know is that the tax laws governing moving expenses have now changed.

Check this out: Your synagogue had hired a new rabbi. The rabbi will be moving from Boston where she is working as an Associate Rabbi to Northern New Jersey where she will become the rabbi of a 400-family synagogue. Her contract states the synagogue will cover moving expenses for which the estimated amount is $6,000.

According to an article in Church Law and Tax Report, the synagogue’s payment of the $6,000 for moving expenses must now be considered as taxable income for the rabbi.

And the costs associated with moving – home inspection, legal fees – that would have been deductible as moving expenses that were job related in 2017 are no longer deductible in 2018.

For profit companies, especially the Fortune 500, are supposedly reaping the gains of lower tax rates. So covering such added costs for employee moves are not a big deal. Not the case for not-for-profit organizations and houses of worship.

As always, it is important to consult your own tax professionals regarding the new treatment of moving expenses. But unlike the question as to how the new tax law will impact financial support of the synagogue, such changes in the treatment of moving expenses will directly impact newly hired clergy and other synagogue hires.

For synagogues hiring new employees for whom you are covering the costs of moving expenses – you may wish to add an extra 20%.