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Change in US Tax Law Concerning Clergy Moving Expenses

Some of our clergy read an article about tax law changes in the second quarter newsletter from Wespath (see July 2018 edition of Hark).  According to Conference Treasurer Jim Allen, the issue raised there can be summarized as:

 Moving expenses, whether paid directly by your conference/ church/ employer to the moving company or reimbursed to the clergyperson, must now be included in gross income, creating tax liability.

The Hark article is talking only about moving expense reimbursements, which are now taxable.  The tax treatment of other important categories of reimbursement, such as mileage, books, and continuing education, are unchanged.

FOR EXAMPLE: If a pastor was moved this year, and the receiving church paid $1000 for a moving truck, then that $1000 should be added to the pastor’s year-end W-2 as taxable income (Box 1 on the W-2). On the other hand, the proponents of the December tax bill believe that the reduction in the tax brackets would save moved employees enough to offset this additional tax liability. For year-end tax and statistics reporting, this additional “income” will be handled the same as a “gift” or “bonus” that many churches give their pastor around Christmas.  If the payment is reported to the District Office as a compensation increase, then it will get into the Conference’s compensation database for purposes of benefits.