Re: New tax updates

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New tax updates

by Ziggy

May 25, 2018

FYI, there is a little bit of news on the new tax on moves. not good for new hires or those leaving the DoDEA.

full text of the unions update:

We wanted to update our members about the situation involving taxes on relocation and other travel expenses.

Last week, the General Services Administration issued a memo (available here) offering additional information and guidance on some of the tax issues that have arisen as a result of the new tax law enacted last year.

The GSA memo authorizes agencies to pay Withholding Tax Allowance (WTA) and Relocation Income Tax Allowance (RITA) to cover "substantially all" of the increased tax liability for relocation expense reimbursements paid directly or indirectly to employees who are transferred "in the interest of the Government" from one official station or agency to another for permanent duty.

FEA interprets this to mean that current DoDEA employees who are reassigned/transferred from one DoDEA locatio...See MoreFYI, there is a little bit of news on the new tax on moves. not good for new hires or those leaving the DoDEA.

full text of the unions update:

We wanted to update our members about the situation involving taxes on relocation and other travel expenses.

Last week, the General Services Administration issued a memo (available here) offering additional information and guidance on some of the tax issues that have arisen as a result of the new tax law enacted last year.

The GSA memo authorizes agencies to pay Withholding Tax Allowance (WTA) and Relocation Income Tax Allowance (RITA) to cover "substantially all" of the increased tax liability for relocation expense reimbursements paid directly or indirectly to employees who are transferred "in the interest of the Government" from one official station or agency to another for permanent duty.

FEA interprets this to mean that current DoDEA employees who are reassigned/transferred from one DoDEA location to another would have to pay taxes for any government-provide moving assistance (including things like shipment of household goods, airfare or other transportation to a new location, lodging en route to the new location, etc. -- see the full list of relocation expense reimbursements now taxable in item #5 of the GSA memo). However, employees moving from one location to another in the interest of the Government (this would include DoDEA employees being relocated due to transfers and excessing) can then apply for WTA or RITA to be reimbursed for "substantially all" the taxes these employees would have to pay on moving services/reimbursements provided to them by the government.

The WTA and RITA reimbursements are NOT authorized for current employees who are separating from federal service (due to things such as retirement, resignation or termination from DoDEA). Nor are those reimbursements authorized for new employees just entering the system.

This means the tax burden on people coming into or exiting employment with DoDEA will remain in place, creating a massive financial hardship for these individuals. FEA/NEA and our partners in other agencies representing federal employees will continue pushing for a legislative fix to this incredibly unfair tax situation, in hopes that something can be passed during this tax year to eliminate this burden from separating and incoming employees. We are also calling upon DoDEA management to be forthright with new hires by informing them of this situation and the tax burden that will be placed upon them if they are relocated by the government from CONUS to another location to work in DoDEA.

FEA realizes this situation is creating a lot of stress and hardship for members, especially those who are departing DoDEA at the end of this school year. We will continue to update our members throughout the year as this situation develops.

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someday Leo.. I am thinking every angle here but remember you don't necessarily owe taxes on this. It ends up becoming income. If they do take taxes from payroll, etc you may get it back at tax time. I am going to do everything possible to reduce taxable income this year if I am going to lose the money anyway it is better to max out TSP (401k) get an FSA a...See More

May 27, 2018

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Leo @someday, Good point. Thanks!

May 28, 2018

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HelpOthers 20% tax will automatically be pulled as part of the move up front- so it won't wait until you file taxes.

Jun 1, 2018

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someday From what are they pulling the money? It makes sense if you are given a chunk of cash and they reduced the payment by 20%. Which I would happily do instead of paying taxes on government moving costs. I might get some back at tax time if they take it, hopefully.

Jun 1, 2018

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Whisper I can't speak to how the new system will work, but here's how it worked when we PCSed last year: We paid our travel and lodging expenses up front and we were reimbursed a month or two later. Then when we filed our taxes in April of this year, we got a HUGE tax refund. I can only assume that the tax on our moving expenses had been withheld from my h...See More

Jun 1, 2018

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