41 CFR 302-17.8 - What limitations and Federal income tax treatments apply to various relocation reimbursements?

§ 302-17.8 What limitations and Federal income tax treatments apply to various relocation reimbursements?

(a) If you were moving yourself for a new job, with no help from your employer, then you probably would be able to deduct some of your relocation expenses. However, if you are eligible for WTA and RITA under this part, your Federal agency reimburses you or pays directly for many relocation expenses that otherwise would be deductible. Since you could have deducted these expenses if you had paid them yourself, the benefits you receive from your agency for these “deductible” relocation expenses are nontaxable. Therefore, you do not report them as income and you cannot take them as deductions.

(b) However, many other relocation benefits are taxable income to you, the employee, because you could not have deducted them. You also may not deduct the additional taxes you incur, as a result of taxable benefits (except that you may deduct state and local income taxes on your Federal tax return). Your agency will reimburse you for most of these taxable expenses and for substantially all of the additional taxes that you incur as a result of the taxable benefits.

(c) The following table summarizes the FTR allowances, limitations, and tax treatment of each reimbursement, allowance, or direct payment to a vendor. See IRS Publication 521, Moving Expenses, and the cited FTR paragraphs for details.

Table to § 302-17.8 - FTR Allowances and Federal Income Tax Treatments

Entitlement Summary of FTR allowance FTR Part or section Tax treatments
Meals while en route to the new duty station The standard CONUS per diem for meals and incidental expenses § 302-4.200 Taxable.
Lodging while en route to the new duty station The standard CONUS per diem for lodging expenses for the employee only § 302-4.200 Nontaxable provided the cost is reasonable according to the IRC.
Transportation using your POV to your new duty station Actual cost or the rate established by the IRS for using a POV for relocation Part 302-4 Nontaxable.
Transportation to your new duty station using a common carrier (an airline, for example) Actual cost Part 302-4 Nontaxable.
Per diem and transportation for househunting trip Actual Expense Method: 10 days of per diem plus transportation expenses - must be itemized; Part 302-5 Taxable.
or Part 302-5 Taxable.
Lump Sum Method: Locality rate times 5 (one person) or times 6.25 (employee and spouse) for up to 10 days - no itemization required.
Temporary quarters subsistence expenses (TQSE) Actual Expense Method: Maximum of 120 days; full per diem for only the first 30 days - itemization required; or § 302-6.100 Taxable.
Lump Sum Method: Multiply number of days allowed by .75 times the locality rate (30 days maximum) - no itemization required. § 302-6.200 Taxable.
Note: Additional TQSE allowances for family members are less than the benefit for the employee occupying TQ alone.
Shipment of household goods (HHG) to include unaccompanied air baggage (UAB) and professional books, papers, and equipment (PBP&E) Transportation of up to 18,000 pounds Part 302-7 Transportation of goods from your former residence to your new residence is nontaxable.
Temporary storage of household goods in transit, as long as the expenses are incurred within any 30 calendar day period after the day your items are removed from your old residence and before they are delivered to the new residence Temporary storage of up to 30 days (However, see the section immediately below) § 302-7.9 Nontaxable.
Temporary storage of household goods beyond 30 days Temporary storage of 60 plus 90 days, NTE 150 days for CONUS relocations, and 90 days plus another 90 days, NTE 180 for OCONUS relocations § 302-7.9 Taxable.
Extended storage of Household Goods (HHG) CONUS - TCS (per agency policy) or isolated duty station only § 302-3.414; Part 302-8, Subpart B Taxable.
OCONUS - Agency policy Part 302-8, Subparts C and D Nontaxable.
Transportation of privately-owned vehicle (POV) CONUS - Agency discretion Part 302-9, Subpart D Nontaxable.
OCONUS - Agency discretion Part 302-9, Subparts B & C Nontaxable.
Shipment of mobile home in lieu of HHG Limited to maximum allowance for HHG § 302-10.3 Nontaxable.
Residence transactions:
▪ Sale of home Closing costs up to 10% of actual sales price § 302-11.300(a) Taxable.
▪ Purchase of home Closing costs up to 5% of actual purchase price § 302-11.300(b) Taxable.
▪ Lease-breaking Itemization required §§ 302-11.430 & 431 Taxable.
Payments to Relocation Service Contractors According to agency policy and contracts Part 302-12 Taxability determined on a case-by-case basis.
Home Marketing Incentive Payment See internal agency policies and regulations Part 302-14 Taxable, but not eligible for WTA or RITA.
Property Management Services See internal agency policies and regulations Part 302-15 Taxable.
Miscellaneous expenses $650 or $1,300; or § 302-16.102 Taxable.
Maximum of 1 or 2 weeks basic pay § 302-16.103 Taxable.
Withholding tax allowance 25 percent of reimbursements, allowances, and direct payments to vendors Part 302-17, Subpart B Taxable.
Relocation income tax allowance Based on income and tax filing status Part 302-17, Subpart C Taxable.