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Civilian Relocation PCS Tax Changes 

The Tax Cuts and Jobs Act of 2017 made most civilian permanent change of station entitlements taxable. 

The TCJA does not affect travel allowances received prior to Jan. 1, 2018. To learn more about the background behind this change, click here.   

Important 

2018 W-2C:

If you received a 2018 W-2C reporting a payment or payments made to a vendor on your behalf for household goods shipment, follow these steps: 

  • Amend your 2018 tax return(s) with the IRS and state and/or local revenue authorities, if applicable.
  • After you have filed your amended tax return(s), you may file a Relocation Income Tax Allowance (RITA) claim to recoup substantially all Federal and State tax liability associated with your relocation allowances. 

IRS guidance for employees receiving a Travel 2018 W-2C can be found here.  Also, here is a factual narrative describing the circumstances surrounding the issuance of your 2018 travel W-2C.  You may find it helpful when seeking penalty relief from the IRS.

To request penalty relief, call the IRS toll-free 833-295-5070 Ext. 287 or mail the request to: IRS 5045 East Butler Ave Stop AY001 Fresno, CA 93727. Notate “W-2C Penalty Relief” at the top of the written request.

DFAS remitted the Social Security (6.2%) and Medicare (1.45%) taxes owed on the 2018 vendor payment(s) to the IRS on your behalf.  You will receive, via the US Postal Service, an official debt letter from DFAS for recoupment of those tax dollars. 
 


W-2Cs:

If you received a W-2C for tax year 2019 or beyond reporting a payment or payments made to a vendor on your behalf, follow these steps: 

  • Amend your tax return(s) with the IRS and state and/or local revenue authorities, if applicable.
  • After you have filed your amended tax return(s), you may file a Relocation Income Tax Allowance (RITA) claim to recoup substantially all Federal and State tax liability associated with your relocation allowances. 
Depending upon your circumstances, the IRS may impose penalties on the Federal income owed for the vendor payment made on your behalf.  Here is a factual narrative describing the circumstances surrounding the issuance of your travel W-2C.  You may find it helpful when seeking penalty relief from the IRS.  Information regarding how to seek penalty relief can be found on the IRS website at https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief

DFAS remitted the Social Security (6.2%) and Medicare (1.45%) taxes owed on the vendor payment(s) to the IRS on your behalf.  You will receive, via the US Postal Service, an official debt letter from DFAS for recoupment of those tax dollars.
 
RITA Eligibility Expansion

A recent change in the law expands RITA eligibility to include four categories of travelers who were previously excluded: 

  1. New appointees;
  2. Senior Executive Service employees performing a “last move home”;
  3. Individuals returning from an overseas assignment for the purpose of separation from Government Service; and
  4. Individuals assigned under the Government Employees Training Act.

The change in law, which occurred December 20, 2019, was given an effective date of January 1, 2018.  Accordingly, if you paid taxes on civilian relocation entitlements which were reported as taxable income on a 2018 and/or 2019 W-2 or W-2C, you are eligible to file a RITA claim.

Note: The Relocation Income Tax Allowance (RITA) filing deadline has been extended to July 15, 2020. See the RITA page for more information on filing and who is eligible for a RITA.


How the TCJA will affect you depends on when your PCS orders were issued. Select from the options below to see specific information for your situation and get the most updated information.

 Button for PCS orders issued in 2018 Button for PCS orders issued after 2018Button for civilian relocation tax changes frequently asked questions 

Taxable Entitlements 

The following is a list of all taxable PCS entitlements. These pages link to additional information about each entitlement.

A graphic showing the tax rates for civilian PCS taxable entitlements.

State and local taxes are not withheld, so you should consult with your local tax advisor to determine if your PCS wages are taxable under your current state and local government laws and regulations.


Get Help with the Costs of Taxable Entitlements

Button for Relocation Income Tax AllowanceButton for Witholding Tax Allowance

Need to talk to someone? Please contact the Customer Care Center at 1-888-332-7366, options 1 then 1, or contact us by email at DFAS-CIVREL-Questionsonly@mail.mil for any additional questions.

For employees located overseas, you may contact the Customer Care Center via DSN 312-699-8030 or 312-699-0300 between the hours of 7:30 a.m. and 5 p.m. EST.

Please note, the information on these pages is intended for DFAS Travel Pay customers. If you are not sure if this includes you, click here for a listing of DFAS civilian PCS travel customers.

Page updated March 26, 2020