The Republican Tax Plan: Analysis – No More Moving Expenses


Elimination of Fringe Benefits of Bicycles
for Commute and Moving Expense Deduction

As I have said in prior posts, people who are solely employees did not make out well in the new tax law especially when compared to those who have a business and to those who are treated as independent contractors. The new law eliminated some fringe benefits for employees. I expect this to continue in the future as our deficit increases.

I. Under pre-Tax Cuts law, an employee could exclude up to $20 per month in qualified bicycle commuting reimbursements:

Starting after December 31, 2017, and before January 1, 2026, the exclusion from gross income and wages for qualified bicycle reimbursements is suspended.

Sandy’s hot tip: Despite the elimination of this exclusion, bicycles used in a trade or business are depreciable. Thus, if you have a newspaper route and are treated as an independent contractor, you can depreciate the bike to the extent it is used for business.

II. Exclusion for Moving Expense Reimbursement Suspended:

Under the pre-Tax Cuts law, an employee could exclude qualified moving expenses reimbursements from his or her gross income and from his or her wages.

Beginning on January 1, 2018 and ending before January 1, 2026, the exclusion for qualified moving expenses reimbursements is suspended with the exception for members of the Armed forces on active duty and for their spouses and dependents who move pursuant to a military order and incident to a permanent change of station.

III. Moving Expense Deduction Suspended:

Under pre-Tax Cuts law, an employee could claim a deduction for moving expenses incurred in connection with starting a new job if they meet certain distance requirements and wasn’t reimbursed by their employer.

The new Tax Cuts law suspends the moving expense deduction except for people who are on active duty with the armed forces. The suspension begins after December 31, 2017 and ends before January 1, 2026.

Sandy’s elaboration: I think it is sad that Congress would get rid of the small bicycle deduction used for commuting and the moving expense deduction to give people who earn over $400,000 a tax break.

Frankly, I can’t think of a reason why Congress had such a problem with employee moving expenses as a deduction. They won’t even allow companies to reimburse employees for moving expenses. What is still unclear in my mind is whether a company can deduct the cost of moving their furniture and equipment to another location? After all, this isn’t a reimbursement to or for an employee for moving expenses. Though it is likely they will be allowed this deduction, I guess we will need to see how this plays out.

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