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Relocating

Are you considering relocating your federal career - either by your choice or by Uncle Sam? There are practical issues and concerns to think about when deciding whether or not to relocate. Others have done it while still others have not. This forum will allow for all to offer their insight, post their questions, and help each other out.

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allday721  
#1 Posted : Thursday, July 16, 2020 8:04:42 PM(UTC)
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I am a few months out from my first PCS CONUS to CONUS. I found out I am eligible for HHT and other entitlements and I want to get a handle on what my taxes I have to pay will be. Also I can't seem to find any real helpful info on WTA and RITA and I do not understand how it can repay tax burdens if it is taxed as well. Wouldn't that count against me if it pushes me into a higher tax bracket?

Also has anyone looked for CPA's with knowledge on PCS moves within the gov?
FatHappyCat  
#2 Posted : Friday, July 17, 2020 1:00:37 AM(UTC)

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Assuming you're DoD, what you'll see after the move is complete is an LES of the total amount paid for by the government. This amount is counted as income for tax purposes. The following year you'll receive a bill followed by a debt letter for the taxes owed that the government has paid. After you pay that AND complete your tax return (so the government knows you actually accounted for the additional income), you can file RITA. It's a hassle but once you're done, you're done. Of course, RITA itself is taxable so don't expect the full amount back.

https://www.youtube.com/...h_query=how+to+file+rita
BOPDentist  
#3 Posted : Friday, July 17, 2020 4:59:01 AM(UTC)
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allday721, I could not help but chime in here. When I had the PCS move done through the DOJ (which may be similar to the DOD), at first I had the same reservations and fears about tax burdens and my tax brackets, etc....
However, when it was all said and done, taxes filed, I'll tell you that I was pleasantly surprised; that it worked out well!

My biggest advice to you here: " if you a simple PCS move (see below) then don't over think the whole process & calculations too much".

So let me give you my example here....I PCS'ed from mid-west across to a state 950 miles east. And the entire cost of PCS is all taxable income as you know. If my relocation costs were 20,000. The DOJ reloc. specialist calculates roughly the taxes owed on that, say 8,000. So now my total amount to place into 1040 taxes is 28,000 (all taxable income). However, what I was pleasantly surprised to see was that relocation W2 already had the withholdings in it (this is the figure that you add along with your regular W2 for federal/state income taxes withheld; kind of like an offset), meaning I was not going to write a check for additional tax incurred due to that 28,000 (additional to taxable income). Yes, there can be a scenario where you may owe a small amount, small though, because they normally use a 2% withholding rate for state taxes, and some states have much higher state income tax rate. In my case I was moving to a state with a much higher state tax rate than 2% and I knew that well in advance. To counter it, I was already making higher state tax withholdings for the biweekly pay periods (via the state W4 form).
Then the following year, that reloc. specialist will contact you again to "settle the RITA"; again a new, but much smaller taxable income will be generated, but like before, the withholdings will already be included! So you add the RITA amount to the taxable income, and the withholding from it to the taxes withheld section, and it all evens out.

In my case, and I imagine in most cases, people come out "on top" with a full PCS move.

I am aware that with some PCS moves, some people will have home sales (via the home sale program), or temporary lodgings, even have HHGs temporarily stored for a certain period of time. In such a case the entire PCS move may be generate a huge taxable income, but then it will also generate a much larger withholding amount to offset it! But I can imagine that such a large taxable amount being added in can push someone to the next tax bracket.

My above experience was for a typical PCS move that did not involve a home sale, temp lodgings, or HHG storage. It was a quick and easy move. If I did have a home, I had the option to sell it myself, and then the selling expenses could be refunded to me, up to a certain amount, as a part of the PCS move (which would increase the PCS cost, but also the withholding amount offset).

Hope it helps.
BOPDentist  
#4 Posted : Friday, July 17, 2020 5:20:29 AM(UTC)
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…..and I forgot to add, that at least in my case, for the second year when the RITA was settled, that full amount was a direct deposit to the bank. So it is money in your bank, and not simply a figure that is added to 1040 taxable income without one even "seeing" that money in the bank. And the RITA W2 will also include the withholding in it.

Be aware that in all these calculations, the PCS cost is increased by amount of withholding to generate a tax burden.
Meaning, if one had an actual PCS cost (movers, storage, etc) of #30,000 and such an income could generate like $10,000 in taxes, then the total PCS cost is $40,000 (not 30,000) in that first year of filing. The W2 would show income of $40,000, and a withholding of $10,000. In the second year, you will get back some/all of the money that arose due to the tax burden from the first year (using 40,000 as taxable income rather than 30,000). It does not mean you get 10,000 back, but you get the tax difference back from using 40,000 as taxable inc, versus 30,000 by means of tax brackets (marg tax rate) that applies. The amount you get back in bank the second year along with the new tax burden that it would incur, now serves as taxable income for the next year. When you file taxes that 2nd year thereafter, the whole process comes to an end.

It may seem complicated, but as I said before it has a way of "working out in favor of the employee" generally.

Anyone else can chime in if they think my explanation was off/wrong or of their experience was different. Again my experiences are based on a PCS move with the DOJ.
GWPDA  
#5 Posted : Friday, July 17, 2020 10:03:01 AM(UTC)
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Under the terms of my appointment, I was due to receive PCS to return to home station and retire. The Army begged to differ. I moved myself and paid for it myself. I intend to deduct the cost on next year's taxes, as a DOD employee. Make very sure that you take no steps without written authorisation from your agency.
FatHappyCat  
#6 Posted : Friday, July 17, 2020 10:22:57 AM(UTC)

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Originally Posted by: GWPDA Go to Quoted Post
Under the terms of my appointment, I was due to receive PCS to return to home station and retire. The Army begged to differ. I moved myself and paid for it myself. I intend to deduct the cost on next year's taxes, as a DOD employee. Make very sure that you take no steps without written authorisation from your agency.


be careful with this. nearly every moving expense has been made non-tax deductible when the tax law changed in 2018.....thanks Trump~

Endless Summer  
#7 Posted : Friday, July 17, 2020 10:43:06 AM(UTC)
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Originally Posted by: FatHappyCat Go to Quoted Post
Originally Posted by: GWPDA Go to Quoted Post
Under the terms of my appointment, I was due to receive PCS to return to home station and retire. The Army begged to differ. I moved myself and paid for it myself. I intend to deduct the cost on next year's taxes, as a DOD employee. Make very sure that you take no steps without written authorisation from your agency.


be careful with this. nearly every moving expense has been made non-tax deductible when the tax law changed in 2018.....thanks Trump~



You're likely to get much better results by appealing to the Civilian Board of Contract Appeals https://cbca.gov/ which has jurisdiction over relocation and transportation issues for Government employees including DoD civilians.

Take some time to review their findings, you're sure to find cases that match your own circumstances. Filing an appeal is simple, can be done electronically, needs no lawyers or fancy Latin language, and they rule quickly and fairly.

Making up your own tax law rarely works out well. I was on active duty with a guy who, figured that since he was paid by tax dollars, and he himself paid taxes, that he could consider himself self employed for a portion of the year... Yeah, I wonder how that worked out for him.
TheRealOrange  
#8 Posted : Friday, July 17, 2020 10:46:00 AM(UTC)
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Originally Posted by: FatHappyCat Go to Quoted Post
Originally Posted by: GWPDA Go to Quoted Post
Under the terms of my appointment, I was due to receive PCS to return to home station and retire. The Army begged to differ. I moved myself and paid for it myself. I intend to deduct the cost on next year's taxes, as a DOD employee. Make very sure that you take no steps without written authorisation from your agency.

be careful with this. nearly every moving expense has been made non-tax deductible when the tax law changed in 2018.....thanks Trump~

Yep. Except for active duty relocations, moving expenses are no longer deductible for federal tax purposes.

https://www.businessinsi...%20change%20of%20station
allday721  
#9 Posted : Friday, July 17, 2020 6:33:14 PM(UTC)
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Originally Posted by: BOPDentist Go to Quoted Post
allday721, I could not help but chime in here. When I had the PCS move done through the DOJ (which may be similar to the DOD), at first I had the same reservations and fears about tax burdens and my tax brackets, etc....
However, when it was all said and done, taxes filed, I'll tell you that I was pleasantly surprised; that it worked out well!

My biggest advice to you here: " if you a simple PCS move (see below) then don't over think the whole process & calculations too much".

So let me give you my example here....I PCS'ed from mid-west across to a state 950 miles east. And the entire cost of PCS is all taxable income as you know. If my relocation costs were 20,000. The DOJ reloc. specialist calculates roughly the taxes owed on that, say 8,000. So now my total amount to place into 1040 taxes is 28,000 (all taxable income). However, what I was pleasantly surprised to see was that relocation W2 already had the withholdings in it (this is the figure that you add along with your regular W2 for federal/state income taxes withheld; kind of like an offset), meaning I was not going to write a check for additional tax incurred due to that 28,000 (additional to taxable income). Yes, there can be a scenario where you may owe a small amount, small though, because they normally use a 2% withholding rate for state taxes, and some states have much higher state income tax rate. In my case I was moving to a state with a much higher state tax rate than 2% and I knew that well in advance. To counter it, I was already making higher state tax withholdings for the biweekly pay periods (via the state W4 form).
Then the following year, that reloc. specialist will contact you again to "settle the RITA"; again a new, but much smaller taxable income will be generated, but like before, the withholdings will already be included! So you add the RITA amount to the taxable income, and the withholding from it to the taxes withheld section, and it all evens out.

In my case, and I imagine in most cases, people come out "on top" with a full PCS move.

I am aware that with some PCS moves, some people will have home sales (via the home sale program), or temporary lodgings, even have HHGs temporarily stored for a certain period of time. In such a case the entire PCS move may be generate a huge taxable income, but then it will also generate a much larger withholding amount to offset it! But I can imagine that such a large taxable amount being added in can push someone to the next tax bracket.

My above experience was for a typical PCS move that did not involve a home sale, temp lodgings, or HHG storage. It was a quick and easy move. If I did have a home, I had the option to sell it myself, and then the selling expenses could be refunded to me, up to a certain amount, as a part of the PCS move (which would increase the PCS cost, but also the withholding amount offset).

Hope it helps.


Originally Posted by: BOPDentist Go to Quoted Post
…..and I forgot to add, that at least in my case, for the second year when the RITA was settled, that full amount was a direct deposit to the bank. So it is money in your bank, and not simply a figure that is added to 1040 taxable income without one even "seeing" that money in the bank. And the RITA W2 will also include the withholding in it.

Be aware that in all these calculations, the PCS cost is increased by amount of withholding to generate a tax burden.
Meaning, if one had an actual PCS cost (movers, storage, etc) of #30,000 and such an income could generate like $10,000 in taxes, then the total PCS cost is $40,000 (not 30,000) in that first year of filing. The W2 would show income of $40,000, and a withholding of $10,000. In the second year, you will get back some/all of the money that arose due to the tax burden from the first year (using 40,000 as taxable income rather than 30,000). It does not mean you get 10,000 back, but you get the tax difference back from using 40,000 as taxable inc, versus 30,000 by means of tax brackets (marg tax rate) that applies. The amount you get back in bank the second year along with the new tax burden that it would incur, now serves as taxable income for the next year. When you file taxes that 2nd year thereafter, the whole process comes to an end.

It may seem complicated, but as I said before it has a way of "working out in favor of the employee" generally.

Anyone else can chime in if they think my explanation was off/wrong or of their experience was different. Again my experiences are based on a PCS move with the DOJ.


BOP did you use WTA at all? My situation is the opposite as I am PCSing from the east coast to a location about 850miles away in the south where the state income tax is less than what I pay now. Did you have to pay anything out of pocket before the RITA was deposited the next year? Did you add any extra withholding in your checks or was the relocation automatically taken out? I am probably going to have as much withheld as I can afford for the next couple of months until the move just to be safe then worst case I'll get it back in a refund check.
BOPDentist  
#10 Posted : Saturday, July 18, 2020 6:10:08 AM(UTC)
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I didn't use WTA at all, but I did get a small upfront amount to help out with actual driven, hotel stays and per diem for my move. With my PCS move I never paid anything out of pocket.
Relocation is not something taken out of paychecks, in BOP. In the DOJ the government pays the Entire costs, however, that entire benefit becomes taxable income for tax purposes. But withholding of tax is also incorporated into that relocation W2. I just made a bit extra withholding in my paychecks to cover in case the state tax withheld was not enough or if I had been pushed into the next tax bracket.

Now in DOD, if the relocation process is different and you pay back in paychecks over a period of time, then I think the tax aspect is different. An entitlement or taxable benefit is treated differently than a debt when it comes to filing taxes.

It's TRUE though active duty pcs moves are treated differently than civilian pcs moves. Civilians cannot deduct moving expenses anymore from their AGI.
allday721  
#11 Posted : Saturday, July 18, 2020 7:45:03 AM(UTC)
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Originally Posted by: BOPDentist Go to Quoted Post
I didn't use WTA at all, but I did get a small upfront amount to help out with actual driven, hotel stays and per diem for my move. With my PCS move I never paid anything out of pocket.
Relocation is not something taken out of paychecks, in BOP. In the DOJ the government pays the Entire costs, however, that entire benefit becomes taxable income for tax purposes. But withholding of tax is also incorporated into that relocation W2. I just made a bit extra withholding in my paychecks to cover in case the state tax withheld was not enough or if I had been pushed into the next tax bracket.

Now in DOD, if the relocation process is different and you pay back in paychecks over a period of time, then I think the tax aspect is different. An entitlement or taxable benefit is treated differently than a debt when it comes to filing taxes.

It's TRUE though active duty pcs moves are treated differently than civilian pcs moves. Civilians cannot deduct moving expenses anymore from their AGI.


I believe it is the same process for the DOD. You follow the JTR or FTR right? Did you get a second W2 for the relocation or was it just 1 W-2? Did you have to amend anything with the IRS?
BOPDentist  
#12 Posted : Sunday, July 19, 2020 5:28:09 AM(UTC)
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Yes I believe we do follow the FTR used by most agencies.

First year after actual relocation, you get 2 W2s, wage one and the separate relocation one, both of which including figures to be used in tax return filing. Then subsequent year you'll get 2 W2s again, the wage one which is default for every year and another relocation based W2 containing RITA settlement figures to be used for taxes.

I did not amend any returns, didn't need too.

The agencies are good with getting the relocation W2 to employees well in time for 1040.
djp  
#13 Posted : Sunday, July 19, 2020 10:06:50 AM(UTC)

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I have not fo e a PCS under new tax rules...

If agencies are doing it as the raw costs of the move is say $15,000 thrn the adjust the amount paid to you is full cost+ tax burden there shouldn’t be that many issues. If worried you can have more taxes withheld prior to the tax return ftom the pay check.

The piece you need to plan for is money are you tend for the actual moveof hotel and food costs at leaving site, travel move, hotel and meals at new site before you can move into new place.

If you don’t have that cash you need to see about getting an advance.

IF Dems have full control next year I see this getting restored in tax return with all moving expenses being tax deductible

allday721  
#14 Posted : Sunday, July 26, 2020 6:39:46 PM(UTC)
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Originally Posted by: BOPDentist Go to Quoted Post
Yes I believe we do follow the FTR used by most agencies.

First year after actual relocation, you get 2 W2s, wage one and the separate relocation one, both of which including figures to be used in tax return filing. Then subsequent year you'll get 2 W2s again, the wage one which is default for every year and another relocation based W2 containing RITA settlement figures to be used for taxes.

I did not amend any returns, didn't need too.

The agencies are good with getting the relocation W2 to employees well in time for 1040.


BOP did you have to cover the costs of your hotel stay and other things for the en route travel or did you use the Gov Credit Card? At the end did you just have a voucher to fill through DTS or is this something different?
BOPDentist  
#15 Posted : Wednesday, July 29, 2020 7:43:16 AM(UTC)
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allday721,

I did not have hotel stay since I drove the entire trip in one shot. I didn't have nor did I use a Govt credit card.
At the end I remember filling out a sheet of my drive, start date/time, odometer reading, and then end date/time with odometer reading, so that I could be paid for mileage....the other nominal costs were covered in the per diem rates.
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