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TAXABLE ENTITLEMENTS

Important Tax Information

Most of your civilian PCS travel claims are taxable.
When you perform a permanent change of station (PCS) with the government, the Internal Revenue Service (IRS) considers the majority of your entitlements to be taxable.

Taxable reimbursements include:

  1. Meals en route to your new duty station
  2. All House Hunting Trip (HHT) expenses
  3. All Temporary Quarters Subsistence Expenses
  4. All Real Estate expenses
  5. Household Goods (HHG) storage after 30 days
  6. Miscellaneous Expense Allowance
  7. Relocation Services (i.e., HMIP, Home Marketing Incentive Payments)
  8. Withholding Tax Allowance (WTA)
  9. Relocation Income Tax Allowance (RITA)

Non-taxable reimbursements include:

  1. Household Goods (HHG) Shipment
  2. Household Goods (HHG) Storage for first 30 days
  3. En route travel (lodging and transportation, to include government issued airline tickets)
  4. Privately Owned Vehicle (POV) shipment

Note: Some immediate tax relief may be available to offset the impact of the taxes withheld on Civilian PCS Travel Claims. Get more information on the topic of Withholding Tax Allowance and the Relocation Income Tax Allowance or contact customer service for additional information.

These items are taxable to you in the calendar year in which you are issued the reimbursement, not necessarily the year the expense is incurred. For example, a real estate closing December 27, 2009, with reimbursement issued January 28, 2010; this would be taxable for 2010.

For the above taxable and non-taxable items, the paying travel office issues a PCS W-2 by January 31 of the year following the year of reimbursement. DFAS Cleveland issues the W-2s for our Navy customers. In addition, DFAS Cleveland issues a W-2 for each PCS voucher processed, so Navy travelers may receive multiple PCS W-2s. Please note that this is a separate W-2 from the one issued by the servicing payroll activity. Travel advances are not taxed and are not included in the W-2.

Note: A mandatory 25 percent Federal Withholding Tax (FWT) is withheld from all taxable entitlements before payment of a claim, but state and local taxes are not currently withheld. In addition, applicable FICA (6.2 percent) and Medicare (1.45 percent) taxes are also withheld. FICA is deducted for FERS and CSRS "offset" employees (not deducted for full CSRS employees). The withheld taxes are deposited in your name with the Internal Revenue Service (IRS).

Page update Jan 15, 2013