1. DFAS Home
  2. PCS Travel
  3. Withholding Tax Allowance

WITHHOLDING TAX ALLOWANCE

(FTR, Part 302-17)

You are authorized a withholding tax allowance (WTA). If you elect the WTA, it is computed and paid on each claim that has taxable allowances (and is itself a taxable allowance). It is treated as an advance against Relocation Income Tax Allowance (RITA), and is subtracted from any RITA computed in the following year.

If WTA is elected (and WTA allowance is issued), you must file a RITA claim within 120 days of the following calendar year. Failure to file a RITA claim results in collection of the WTA. If you decline to have WTA paid on each claim, the entire tax allowance is paid in one lump sum on the RITA claim.

When claiming WTA you have two options:

OPTION A: If you anticipate that your Federal Withholding Tax Rate (FWTR) will be 25 percent or greater, WTA will be computed using a rate of 33.33 percent, and you should not be in an overpaid status upon the computation of your Relocation Income Tax Allowance (RITA).

OPTION B: If you anticipate that your FWTR will not be more than 15 percent, WTA will be computed using a rate of 17.647 percent, and you should not be in an overpaid status upon the computation of your RITA.

WTA calculated at 33.33 %

Allowance computed without WTA:
$1,000.00 Miscellaneous Expense Allowance
-  $250.00 FWTR (25%)
-    $14.50 Medicare (1.45%)
-    $62.00 FICA (6.20%)
   $673.50 amount due to traveler

Allowance computed with WTA:
$1,000.00 Miscellaneous Expense Allowance
+ $333.30 WTA (25%)
$1,330.00
-    $19.33  Medicare (1.45%)
-    $82.66  FICA (6.20%)
    $898.01 amount due traveler

In this example, the amount of WTA issued is shown as $333.30. You should set aside this amount until taxes are due to the IRS the following year.

WTA calculated at 17.647 %.

Allowance computed without WTA:
$1,000.00 Miscellaneous Expense Allowance
-  $250.00 FWT (25%)
-    $14.50 Medicare (1.45%)
-    $62.00 FICA (6.20%)
    $673.50 amount due traveler

Allowance computed with WTA:
$1,000.00 Miscellaneous Expense Allowance
+  $176.47 WTA (15%)
 $1,176.47
-  $176.47 FWT (15%)
-    $17.06 Medicare (1.45%)
-    $72.94 FICA (6.20%)
$910.00 amount due traveler

In this example, the amount of WTA issued is shown as $176.47. You should set aside this amount until taxes are due to the IRS the following year.

When a RITA claim is filed the following calendar year, the entire amount of any excess WTA must be repaid. Complete the WTA selection form and fax to one of these numbers. 

Commercial:     216-367-3422              DSN:     580-7833
 

Page updated March 6, 2014