Taxable Entitlements

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Taxable Entitlements

When you perform a Civilian Permanent Change of Station (PCS) with the government, the Internal Revenue Service (IRS) considers the majority of your entitlements to be taxable. 

Traveling in 2018? Most entitlements are now taxable. Find out more here.

Taxable reimbursements include:

  1. Enroute travel, lodging and transportation including IBA/personally procured airfare, government issued airline tickets-CBA, POV mileage, tolls, taxis, etc.
  2. All House Hunting Trip (HHT) expenses, including Government Procured Airfare
  3. All Temporary Quarters Subsistence Expenses, including lodging and meals
  4. All Real Estate expenses
  5. Household Goods (HHG) storage, including storage procured with a TMO
  6. Miscellaneous Expense Allowance (MEA)
  7. Relocation Services (i.e., HMIP, Property Management)
  8. Withholding Tax Allowance (WTA)
  9. Relocation Income Tax Allowance (RITA)
  10. Household Goods (HHG) Shipment - Government Bill of Lading
  11. Privately Owned Vehicle (POV) Shipment
  12. Mobile Home Transportation

Non-taxable

The Relocation Services Company (RSC) home sale program remains non-taxable. This programis where residences of transferees are purchased under a RSC supplier contract and then sold in a separate independent transaction. The cost of those residential sales will continue to be governed by Internal Revenue Service (IRS) Revenue Rule 2005-74 and are not taxable income to employees.

Applicable Taxes

A mandatory 22% Federal Withholding Tax (FWT), applicable 6.2% FICA Tax and 1.45% Medicare Tax is withheld from all taxable entitlements and deposited with the Internal Revenue Service (IRS).

State and Local taxes are not withheld; consult with your local tax advisor to determine if your PCS wages are taxable under your state and local governments current regulations.

The Relocation Income Tax Allowance (RITA) is available to offset the impact of taxes to all employees who incur taxable PCS entitlements after they receive their PCS W2 and file Federal, State and Local Taxes.

Reimbursements are taxable to you in the calendar year that receive them, not the year the expense is incurred. For the above taxable items, DFAS issues a PCS W-2 by January 31 following the year of reimbursement.

Page updated June 26, 2018