Civilian Moving Expenses Tax Deduction

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Tax Deduction for Civilian Moving Expenses

On December 22, 2017 Congress passed Public Law 115-97 suspending the tax deduction for civilian moving expenses.  The following allowances are now taxable in addition to previously taxable entitlements:

  1. Household Goods (HHG) Shipment - Government Bill of Lading (GBL)
  2. Household Goods (HHG) Storage for first 30 days
  3. Enroute travel, lodging and transportation including IBA/personally procured airfare, government issued airline tickets-CBA, POV mileage, tolls, taxis, etc.
  4. Privately Owned Vehicle (POV) shipment
  5. Mobile Home Transportation

The General Services Administration (GSA) issued GSA Bulletin FTR 18-05 on May 14, 2018, which provided implementation guidance.  However, the bulletin does not apply to reimbursements paid in 2018 for travel expenses incurred in a prior tax year.  GSA advised that it will issue regulations covering reimbursements for travel conducted in a previous tax year once the IRS advises how the new tax law applies to these payments.

The DFAS travel pay system is not currently capable of applying different tax treatment to reimbursements paid within the same year based upon the year in which the moving expenses were incurred.  DFAS will continue paying civilian relocation travel claims under the old tax laws until the IRS and GSA publish complete guidance on the new tax law implementation.  Once this occurs, DFAS will re-compute civilian relocation claims paid in 2018 to collect the applicable Federal Income Tax Withholding (FITW) at 22%, Social Security at 6.2% and Medicare at 1.45%.  These additional withholdings will only apply to the newly taxable allowances listed above.  Previously taxable allowances were withheld on the original payment. 

DFAS will notify employees who owe taxes on 2018 travel payments as soon possible with payment details and contact information.  The Withholding Tax Allowance (WTA) will be applied to the recomputed tax withholdings of travelers who claimed WTA on their original voucher.

Most civilian relocation travelers subject to tax withholding are eligible to claim a Relocation Income Tax Allowance (RITA) in the year following the tax withholding.  The RITA is intended to reimburse the traveler for substantially all of the federal, state and local income taxes incurred due to relocation.  RITA is not authorized for new appointees, those returning from overseas assignment for the purpose of separation from Government service and those assigned under the Government Employees Training Act. 

See here for RITA information

Page updated June 25, 2018