By Rik Jamieson
The Tax Cuts and Jobs Act, recently enacted by Congress, made numerous changes to the taxation of both individuals and organizations. Several of the changes relate to deductions available to individuals. One such change that has possibly received less attention involves moving expenses. This new tax treatment will result in increased taxes owed by pastors who need to move due to a change in appointment.
Unfortunately the favorable tax treatment for those who incur moving expenses related to appointment changes will be suspended from January 1, 2018 through December 31, 2025. The result of this suspension is that:
- Moving expenses incurred during that time period will not be a deductible expense (except for certain members of the Armed Forces) and
- Any reimbursement by, or payment of, these expenses by an employer during the same time period will need to be reported as taxable income to the employee (again, except for certain members of the Armed Forces).
Thus, for example, if a local church covers some or all of the moving expenses of an employee, such as its incoming pastor, the church will need to report that amount on Form W-2 as taxable income to the employee. (Note: the Conference continues to subsidize the local church for moves up to a maximum of $ 1,600 upon proof of payment of moving expenses.)
And, as another example, if the payment of moving expenses for a retiring pastor is made by an annual conference, the conference will likely need to issue that pastor a Form 1099-MISC reflecting the amount paid. Just so you know, this is not a change in tax treatment; those subsidies have always been taxable to the retiring pastor.
Rik Jamieson serves as Assistant Treasurer for The Pacific Northwest Conference of The United Methodist Church.
