American civilians moving to Camp Humphreys face bigger tax bills during base relocation
SEOUL, South Korea — American civilians moving to Camp Humphreys this year as part of a long-delayed relocation of U.S. military forces south of Seoul are facing a bigger tax bill.
A revision in the new tax-reform law that removed exemptions on moving expenses took effect on Jan. 1, just as the relocation is picking up speed.
U.S. Forces Korea plans to dedicate its new headquarters building on Camp Humphreys in late June, and officials estimate that about 650 employees and their families are expected to move from Seoul this summer.
“We’re calling it the move phase,” USFK assistant chief of staff Col. Christopher Harris said during a town hall meeting last week.
The changes, which are part of the Tax Cuts and Jobs Act of 2017, will impact benefits for civilians moving on military orders in what is known as a permanent change of station, or PCS, he said. Active-duty servicemembers are excluded.
“Most reimbursements and expenditures for U.S. civilians during a civilian PCS are now taxable for the employee,” he said, adding that officials were awaiting guidance from the Defense Finance and Accounting Service.
“We don’t have all the answers yet. Consulting with a tax adviser on the impact of a PCS may be advisable in some circumstances,” he said.
DFAS referred questions to the General Services Administration.
The GSA, in coordination with the IRS, said it sent guidance to federal agencies on May 15.
The federal travel regulation bulletin confirmed that most moving expenses are taxable, including lodging expenses, mileage, transportation and the shipment of household goods.
“It also clarifies the requirements of changes to the federal tax code to reduce income tax withholdings from 25 to 22 percent,” according to a statement by Jessica Salmoiraghi, the associate administrator of the GSA’s office of government-wide policy.
“This bulletin will serve as the policy document agencies should rely on for clear interpretation of the updated tax law until GSA issues an amendment to the Federal Travel Regulation,” she said. “GSA will continue to monitor and work with agencies as they adjust their procedures to incorporate the new tax law requirements.”
Civilians moving to Humphreys are receiving full benefits, including the shipment of household goods, reimbursement for temporary housing and a living quarters allowance.
One U.S. official who moved to Humphreys earlier this year said the IRS was compounding the problem by taking so long to release new rules.
“It’s terrible timing,” he said, adding that he believes the increased tax burden on federal employees was an unintended consequence.
“It was designed for companies with lavish relocation packages,” he said. “We are a captive audience and we are being directed to move.”
Harris said employees should be able to recoup much of the money through an income tax refund but the lack of withholding will likely mean they will owe more in the near term.
“We’ll give the employees the opportunity to recapture some of these expenses,” Harris said. “But it would be prudent to be prepared for a larger tax bill at the end of the year if you’re PCSing during this time of transition.”