Pursuant to Arizona HOUSE BILL 2757, Arizona is now a conforming state, meaning moving expenses are no longer deductible in Arizona for tax year 2019.
And now there are six. As of “today” in tax year 2019, there are six states that remain non-conforming, they are:
AR, CA, MA, NJ, NY and PA
- CA requires CA Form 3903 to be used to deduct moving expenses
- NJ requires moving expenses be excluded from income – NJ 1040 line 7
- NY requires moving expenses be excluded from Federal AGI
Moving expenses remain “non-taxable” in these six states.
Update as of 7/17/2019
Arizona conformed its tax laws retroactive to 1/1/18. What does this mean for your relocating population?
- For all employees who are currently on a tax filing extension, working on completing their 2018 Arizona tax returns to meet the October 15th, 2019 filing deadline, will need to reevaluate the gross up or tax reconciliations they received on their move. Chances are, they were significantly under grossed-up.
- The reason most companies did NOT gross-up for moving expenses at the end of 2018 is because at the time, the state of Arizona still allowed the moving expense deduction. However, due to the retroactive nature of Arizona becoming a conforming state, moving expenses are no longer deductible for Arizona tax payers who are filing on extension.
- If a person had approximately $30,000+/- of previously excludable moving expenses, these expenses are now non-excludable and will need to be grossed-up. Specifically, household goods (HHG) and final move expenses (previously excludable expenses) will now need to be grossed-up.
The good news, no effects on W-2’s or tax returns (since AZ if a Federal AGI state), simply request a gross-up audit or tax reconciliation to address this issue on an individual basis. The biggest factor in determining the additional money due to the AZ employee is the amount of previously excludable expenses they had.