PCS and Tax Changes

Civilian Permanent Change of Station (PCS) Tax Law Changes

The Tax Cuts and Jobs Act of 2017

tax changesTax Cuts and Jobs Act of 2017 made most civilian permanent change of station (PCS) entitlements taxable. law eliminated a number of deductions including the moving expense deduction for federal civilian employees. This Congressional Act eliminated the deduction for the tax year 2018 through the tax year 2025. This change does not apply to military personnel, but does apply to Department of Defense civilian employees.

Most moving benefits paid in 2018 to Federal civilian employees will now be taxable to the employee, regardless of whether the employer reimbursed the employee for their out-of-pocket moving expenses or paid the moving company directly.

Relocation Income Tax Allowance (RITA)

The purpose of the Relocation Income Tax Allowance (RITA) is to reimburse employees for any taxes that are owed that were not adequately reimbursed by the Withholding Tax Allowance (WTA) rates. The WTA calculation is based on the income tax withholding rate applicable to supplemental wages. This may be higher or lower than your actual tax rate. The RITA, on the other hand, is based on your marginal tax rate, determined by your actual table income and filing status, which allows the DoDEA to reimburse you for substantially all of your Federal income taxes. The RITA also reimburses you for any additional state and local taxes that you incur as a result of your relocation, because they are not reimbursed in the WTA process.

Things to know:

  1. RITA is not automatic; you must apply for it in the year after receiving taxable travel pay. For example, if you received taxable travel pay in 2018, you may file a RITA in 2019 after you have filed your 2018 taxes.
  2. If Withholding Tax Allowance was elected, you must file a RITA claim within 120 days of the following calendar year. Failure to file a timely RITA claim will result in a debt owed to DFAS and collection of the entire amount of WTA paid on your behalf.
  3. The method for calculating the RITA payment is based on the date you reported to your new duty location.
  4. The amount of income reported on the Certification Form has to match the income tax documentation submitted with the RITA claim
  5. For employees who reported to the new duty location on or after January 1, 2015, the RITA calculation is based on taxable income from the Federal Income Tax Return (Form 1040) (after exemptions and deductions) and the IRS published tax tables.

RITA Voucher Submission:

  1. DD Form 1351-2 (Travel Voucher/Sub Voucher)
    1. You must claim RITA in block 18
    2. Block 20 must be signed and dated by you and your reviewer/supervisor.
  2. DD Form 1614 (Travel Authorization/Orders) with all amendments
  3. Include Direct Deposit Form SF1199A
  4. All W-2s (travel and payroll), including spouse’s if filing jointly, for the year you are claiming RITA.
  5. RITA Status Certification Form-reported to new duty location on/after January 1, 2015
  6. Completed Federal income tax return (Form 1040)
  7. Completed State and Local income tax returns if your travel pay was taxed by a state
  8. Submit your claim to:
  9. Email the Travel/Debt Management Team if you have any further questions. The email address is as follows:

DFAS has updated their website to reflect the RITA tax law changes. See below:

RITA Eligibility Expansion: A recent change in the law expands RITA eligibility to include four categories of travelers who were previously excluded: New appointees; Senior Executive Service employees performing a “last move home”; Individuals returning from an overseas assignment for the purpose of separation from Government Service (Return Rights will fit under this category); and Individuals assigned under the Government Employees Training Act.

The change in law, which occurred December 20, 2019, became effective as of January 1, 2018. If employees paid taxes on civilian relocation entitlements which were reported as taxable income on a 2018 and/or 2019 W-2 or W-2C, they are now eligible to file a RITA claim.

The following DFAS link provides all the updated info concerning a RITA claim to include a Youtube video that provides instructions on how to fill out a RITA claim:

Why is this important?

Since many DoDEA employees move at some point in their career, it is important for all employees to be aware of the change in the law and have access to resources for employees who may be affected now or in the future.

DFASDefense Finance and Accounting Service (DFAS)

The best source of information on this important change is the Defense Finance and Accounting Service (DFAS). Employees are encouraged to visit the DFAS website and to use the processes they have in place to address questions.

DoDEA point of contact

The DoDEA point of contact for related questions is Ms. Karen Johnson, DoDEA Resource Management, at (571) 372-1498 or at Karen.Johnson@hq.dodea.edu.

 


Tax Law Changes

On December 22, 2017 Congress passed Public Law 115-97 suspending the tax deduction for civilian moving expenses. The Tax Cuts and Jobs Act (TCJA) of 2017 made most PCS entitlements taxable. Entitlements will now be reported as taxable income to the Internal Revenue Service (IRS).

All PCS expense payments are taxable except some of the following entitlements:

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