The government provides employees who relocate to a new and permanent office station with allowances to pay for moving expenses, such as house-hunting trips, shipment of house goods, mobile-home movement, and relocation services. The Relocation Income Tax (RIT) allowance is a benefit paid to federal government employees to cover the additional tax liability caused by moving-expense allowances.
Items you will need
- Travel voucher
- Travel orders
- RITA application form
- IRS Schedule SE
Confirm you meet eligibility requirements. Chapter 302 of the Federal Travel Regulation provides a complete list of requirements. For instance, to qualify for the RIT allowance, employees must be transferring to a new and permanent official station in the interest of the government. However, new appointees, workers employed under the Government Employee Training Act, and workers returning from overseas assignments for the purpose of separation, do not qualify.
File for the RIT allowance through the federal agency you work for. Use the same department you used to file for your moving-expense allowances. There isn't a central federal agency that handles RIT applications. Send your application the year immediately after you filed for the income-tax reimbursements.
Submit a travel voucher with your application. This is a document detailing the allowances you are claiming; travel orders, which are official documents requesting you relocate to a new station for work purposes; and a RIT allowance status certification form.
Fill in the required forms. Sign and date them, and get your supervisor to do the same. The forms you need to fill in vary depending on the federal agency you work for. For example, if you work as a civilian for the U.S. Department of Defense, you must fill in DD Form 1351-2 and DD Form 1614, and provide a relocation income-tax allowance status certification form.
Attach copies of all your W-2s, or IRS Schedule SE if you are self-employed, for the year you're claiming for.
Compute your RITA by inserting your information in this formula: RITA=(x/1-w) * (R) - (1-X/1-W)*(Y). In the formula, X stands for the combined marginal tax rate (CMTR) for the year you received the allowances; W stands for the CMTR of the year you file for RITA; R stands for the taxable reimbursements you received; and Y stands for the total withholding tax allowance for the year you received the reimbursements. For example, if your CMTRs of the years you received the allowances and filed for RITA were 15 percent and 20 percent respectively, your relocation allowances totaled $20,000, and your withholding tax allowance for the year you filed for RITA was $3,000, your RITA would amount to $562.50.
- RITA is only available to federal government employees, but all U.S. taxpayers can claim an income tax deduction for moving expenses when they relocate for work reasons. IRS Publication 521 provides information on how to claim moving expenses on your income tax.
- Chapter 302 of the Federal Travel Regulation provides instructions on how to calculate your combined marginal tax rate and your withholding tax allowance.
- RITA application processes may vary slightly depending on the agency where you work. Ask your human resources department for instructions on their RITA application process.
- RITA does not cover all tax liabilities caused by relocation allowances. For example, tax liability caused by extended storage of household goods or the shipment of a privately owned vehicle do not qualify for RITA. Chapter 302 of the Federal Travel Regulation provides a complete list of tax liabilities excluded from coverage.
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