United States Department of Agriculture
Natural Resources Conservation Service		 Go to Accessibility Information
Skip to Page Content




Human Resources Management Division

XVI. Relocation Income Tax Allowance

Moving expenses paid to you are subject to withholding of income taxes and, if applicable, Federal Insurance Contribution Act (FICA) taxes if your new duty station is less than 50 miles farther away from your old home than your old duty station was.

If your move is 50 miles or more, the only moving expenses subject to tax withholding are:
  • Miscellaneous expense allowance.
  • Advance househunting trips, temporary quarter expenses and real estate (residence sale, purchase, and lease termination) expenses are fully taxable.

Payments to you in connection with your transfer are subject to income tax and will be including on your W-2 Form as wages received or other income. You will need to file IRS Form 3903, Moving Expense Adjustment, with your Federal Income Tax Return, IRS Form 1040, in order to deduct any allowable expenses of your move. However, the Tax Return Act of 1986 reclassified moving expenses from deductions before "adjusted gross income" to "deduction from gross income". This change treats moving expenses as an itemized deduction. Although moving expenses remain an allowable deduction, an employee whose itemized deductions are not more than the standard deduction is no longer able to claim separately the moving expense deductions. As a result, the non-itemizing employee incurs tax penalty when compared with the itemizing employee. GSA has recommended legislation that would make Federal employee moving expense reimbursement nontaxable income. Until such legislation is enacted, the Department, GSA, or NRCS cannot address this inequity under the law.

Federal income tax will be withheld at the rate of 28 percent of the taxable expenses paid to you. If state income tax is regularly withheld from your NRCS salary, state tax for these expenses will also be deducted at 10 percent of the federal Income Tax withheld. If you are covered by FICA, this tax will also be withheld unless your regular annual NRCS salary equals or exceeds the current maximum amount subject to FICA withholdings.

However, NRCS will pay to you a relocation income tax (RIT) allowance to reimburse you (if you are eligible) for substantially all of the additional Federal, state, and local income taxes incurred by you, or by you and your spouse if a joint tax is filed for your transfer expense payments.

To protect you from having to use a substantial part of each of your moving expense reimbursements for the withholding of taxes, a partial PIT allowance caped a withholding tax allowance (WTA) will be calculated and paid to you to offset the Federal taxes that are withheld each time a travel voucher is paid. Partial RIT (WTA) allowances apply only to Federal taxes. After the necessary taxes are actually withheld, a partial RIT (WTA) allowance is computed and added to each of your expense reimbursements as part of your overall RIT allowance.

Your RIT allowance does not change the Internal Revenue, state or local tax codes. Consequently, your additional income taxes that result from moving expense payments do not change or limit your income tax obligations in anyway. They do not authorize a refund of these taxes when you file your return with the Internal Revenue Service (IRS) or with other tax authorities. Your RIT allowance is claimed on Form AD-6l6R, Travel Voucher.

The RIT allowance is not applicable to new Federal appointees, student trainees (as defined in the FTR Part 302-3), Senior Executive Service appointees, presidential appointees, and employees assigned under the Government Employees Training Act.

Your RIT allowance is limited to the type of moving expenses that are covered. Public Laws 95-151 and 98-473 authorize NRCS to reimburse you for the additional income taxes that result from moving expense paid to you. However, these moving expenses are not allowable as a moving expense deduction for tax purposes.

The types of expenses or allowances listed below are covered by your RIT allowance:
  • En route travel: Your travel (including per diem) and transportation expenses and those of your family for final en route travel from your old duty station to your new duty station.
  • Household goods shipment: Transportation (including temporary storage) expenses for movement of your household goods from your old duty station to your new duty station.
  • Mobile home movement: Expenses for the movement of a mobile home for use as a residence when movement is authorized instead of shipment and temporary storage of your household goods.
  • Househunting trip: Your travel (including per diem) and transportation expenses and those of your spouse for one round-trip to the new duty station to seek a permanent home.
  • Temporary quarters: Your daily subsistence expenses and those of your family during occupancy of temporary quarters.
  • Real estate expenses: Allowable expenses for the sale of your home (or expenses of settlement of an unexpired lease) at your old duty station for which NRCS pays you directly.
  • Miscellaneous expenses allowance: The miscellaneous expenses allowance authorized for defraying certain expenses associated with discontinuing a home at one location and establishing a home at your new location.

You will receive an IRS Form W-2 from NFC showing payment to you for your Withholding Tax Allowance (WTA) and other taxable reimbursements. You have to prepare and submit a travel expense voucher after GSA publishes marginal tax rates annually to claim your RIT allowance. NFC will compute your RIT allowance and deduct any WTA payments already made to you and then pay you the difference. If you do not file a RIT claim in the year following each tax year you received a WTA, NFC will deduct all the WTA payments they made to you from your salary. Your administrative officer will advise you when you need to file each of your RIT allowance claims.

Since your expense claims and payments may stretch over a 5-year period, it is important to remember that each tax year must be treated separately for payment of your RIT claims.

Finally, on rare occasions, your WTA's from NFC can be greater than your actual RIT allowance each tax year. In these cases, the difference will be owed by you. NFC will bill you for collection and you can pay NFC directly by personal check.

< Back to Transfer Allowances and Relocation Information