When the Tax Cuts and Jobs Act of 2017 redefined employer-paid and reimbursed moving expenses as taxable income, federal workers moving after Jan. 1 were suddenly saddled with tax burdens for permanent-change-of-station moves that can cost thousands of dollars. (Courtesy of Pixaby)
After guidance on moving-expense tax relief for federal workers was issued this summer, some employees are still unsure about how to access the benefits.
When the Tax Cuts and Jobs Act of 2017 redefined employer-paid and reimbursed moving expenses as taxable income, federal workers moving after Jan. 1 were suddenly saddled with tax burdens for permanent-change-of-station moves that can cost thousands of dollars.
The General Services Administration in a May bulletin clarified that agencies could reimburse “substantially all” moving-related tax expenses for civilians who go from one federal job to another through Withholding Tax Allowance and Relocation Income Tax Allowance payments.
However, new employees and retiring employees are not eligible.
After the announcement, many WTA- and RITA-eligible employees are still unaware of how to apply for the reimbursements, according to a statement by Democratic Virginia Sens. Tim Kaine and Mark Warner. The pair asked the GSA last month to encourage federal agencies to “proactively” help federal workers who have moved since Jan. 1, 2018, understand the process.
“RITA reimbursements can only be issued in the year following the additional taxes, meaning workers could be waiting months, or over a year, to get reimbursed,” the senators said in the statement. “Federal workers may have to take on debt or borrow from their retirement accounts to carry these costs as they await reimbursement.”
The WTA program is meant to avoid this problem, as it provides funds earlier than RITA to help “federal workers who are unable to bear the delay of RITA reimbursements,” according to the statement.
“Unfortunately, it appears that at least some federal agencies are not proactively informing their workers about the option to use the WTA,” the senators said in the statement.
The Federal Education Association has been lobbying Congress on behalf of Department of Defense Education Activity employees since the new tax law was implemented. In a Nov. 23 statement, the group said the senators’ actions were in part prompted by information from the National Education Association regarding “the lack of clear information being presented to existing federal employees about tax relief available to them through the [RITA] and [WTA] programs.”
The FEA called informing employees of resources available an “obligation” of management.
“We hope the Senators’ actions will prompt DODEA to quickly provide its employees with better and more useful information on RITA and WTA, including how those programs work and how to apply for them,” the FEA said in the statement.
But not everyone is eligible for RITA and WTA reimbursements. The law only allows for “employees” to receive the payments – so incoming hires and separating former employees are ineligible.
Many new hires and retirees are reporting they have not been told about the tax burden they will face on their moves. The FEA last month accused DODEA management of not doing enough to ensure incoming and outgoing employees are aware of the taxes that await them under the new law.
“This entire tax situation is an unfair burden on civilian employees and DoDEA’s lack of candor to its incoming and departing employees about the tax situation speaks volumes about management’s present negative attitude towards those who work in its schools in service to military families,” DODEA said in the statement.
DODEA spokesman Frank O’Gara told Stars and Stripes in an email this week that the agency is “awaiting definitive guidance from [the Department of Defense] prior to providing communication to all employees on the changes” to “ensure consistency of information.”
“We have provided related information as received to our union partners and have coordinated with our HR servicing personnel at [Civilian Human Resources Agency] to include notices for new, transferring and retiring personnel that there are changes in the tax law that may result in taxable expenses for moves,” O’Gara said.
Kaine and Warner, along with Sens. Susan Collins, R-Maine; Chris Van Hollen, D-Md.; and Mazie Hirono, D-Hawaii, presented a bill to Congress this summer that would fix the issue for new and retiring employees. However, it has not made any progress since it was read into the record and referred to the Committee on Homeland Security July 18.
New and retiring employees who have moved after Jan. 1, 2018 are still expected to pay taxes on moving expenses without relief.
“There is now little chance of legislation being passed this year to provide relief to retiring/separating federal employees or to incoming feds, both of whom are now facing massive tax bills on the moving assistance/allowances they received as DoDEA workers,” the FEA wrote in its statement.
