relocation income tax allowance (rita) income tax reimbursement allowance (itra) national...

Relocation Income Tax Allowance (RITA)Income Tax Reimbursement Allowance (ITRA)

National Aeronautics and Space Administration

www.nasa.gov

Kelly Sauls

2National Aeronautics and Space Administration

What is Relocation Income Tax Allowance?

• RITA is the acronym for Relocation Income Tax Allowance. • It is a moving expense allowance like temporary quarters,

en route travel and per diem, etc.• Its purpose is to reimburse eligible transferred employees

for substantially all of the additional Federal, State and local income taxes incurred by the employee as a result of certain travel and transportation expenses and relocation allowances which are furnished in kind, or for which reimbursement or an allowance is provided by the Government.


Who is entitled to RITA?

• Payment of a RITA is authorized for employees transferred in the interest of the Government, from one official station to another for permanent duty.


What constitutes income?

• The IRS considers any taxable reimbursed moving expenses to be supplemental wages or income to the employee. Furthermore, any payments made directly to a company, known as third-party payments, is income to the employee.

• Airline tickets purchased with a government transportation request (GTR) or against the agency’s government travel account (GTA) and household goods shipped via government bill of lading (GBL) are examples of third-party payments.

• Certain moving expense reimbursements are earned income to the employee and must be included on his/her Form W-2 for the calendar year in which reimbursement is made.

• The agency should furnish the employee an IRS Form W-2 reflecting the moving expense reimbursements.


General Procedures for Payment of RITA

The travel authorization is prepared and includes an estimate of the RITA

Employee submits voucher for reimbursement of moving expenses.

Agency determines reimbursement in accordance with the FTR.

Agency determines if the reimbursement is considered income to the employee by Federal, state or local tax regulations.

Deductions for allowable moving expenses are determined.

The withholding tax allowance is calculated.

Appropriate withholding taxes are deducted.


Cont’d Procedures for Payment of RITA

• NASA sends the employee an itemized list of moving expense reimbursement at the end of the calendar year in which reimbursement was made. The employee also receives a W-2 reflecting the reimbursements paid.

• Employee submits all W-2’s and Schedule SE’s, statement certifying income tax filing status, and claim for the RITA to the NSSC.

• Using information provided the step above, the NSSC calculates appropriate reimbursement and disburses payment.

• The RITA is reported as income to the employee for the calendar year in which the RITA was paid.


RITA FILING INSTRUCTIONS

In order to process your 2006 RITA claim, please complete & fax the following documents:

• Signed Relocation Income Tax Allowance Certification* - be sure to fill out all the required information on the form

• Signed SF1012 (signed in block 13) - be sure to fill out your contact information at the top of the form

• Copies of W-2s for employee and spouse (if applicable) and/or 1099-R (for Military Retirement Only) for the year of the RITA you are filing

• Copies of 1040 Schedule SE (Self-Employment tax form) for employee and spouse (if applicable) for the year of the RITA you are filing

*Note: If you are married filing a joint return or married filing a separate return, your spouse’s signature on the Certification is required.


EXAMPLE RELOCATION INCOME TAX ALLOWANCE

CERTIFICATION


Example SF 1012*Please note all forms should have the NSSC

Fax Cover Sheet and be faxed to:

NASA Shared Services Travel Office

Attention: RITA VoucherFax: 1-866-779-NSSC

(1-866-779-6772)


Example RITA

Reimbursement

Calculation Worksheet

Step I Year 1 Year 2Computation of Combined Marginal Tax Rate:

1. Enter federal tax rate from tax table for relocation income tax allowance 0.31 0.312. Federal tax rate item 1 from 1.00 (1.00 - 0.31 ) Year 1

(1.00 - 0.31 ) Year 2 0.69 0.693. Enter State tax rate from state tax table for relocation income tax allowance. (Table C16019) 0.0000 0.00004. Item 2 multiplied by item 3. 0.000 0.0005. Enter local tax rate. (C16008-5c) 0.00 0.006. Item 5 multiplied by item 2. 0.00 0.007. Items 1,4, and 6 added. Result is the combined marginal tax rate for Year 1 and Year 2. 0.31 0.31

Step II

Relocation Income Tax Allowance Computation (Year 2)

1. Combined marginal tax rate for Year 1 deducted from 1.00 ( 1.00 - 0.31 ) 0.69

2. Combined marginal tax rate for Year 2 deducted from 1.00 ( 1.00 - 0.31 ) 0.69

3. Year 1 combined marginal tax rate divided by item 2. 0.44934. Item 1 divided by item 2. 1.00005. Enter total covered taxable reimbursements from Column F Line 12 (Blackout Sheet Relocation Payment Worksheet) 1,394.00$ 6. Item 5 multiplied by item 3. (relocation income tax allowance) 626.29$ 7. Enter total WTA paid in Year 1. (see Relocation Payment Worksheet) 542.12$ 8. Item 7 multiplied by item 4. 542.12$ 9. Item 6 minus item 8. Result is relocation income tax (RIT) allowance payable or amount subject to collection from employee. (Gross RIT) 84.17$ 10. Item 9 multiplied by 25% federal income tax. 21.04$ 11. Item 9 multiplied by FICA 6.20% (if applicable) (FERS Employee) 5.22$ 12. Item 9 multiplied by Medicare 1.45% (Health Insurance) 1.22$ 12a. Item 9 muplilied by State Tax Deduction TX 0.00 -$ 13. Item 9 minus items 10,11, and 12. (Result Amount Due/Owes employee) (Net RIT) 56.69$ 14. Deduct all Overpayments. -$ 15. Net Payment of RITA Due Employee. 56.69$

Employee Name:Center:Manual Calculation

Verified: Kelly Sauls


What is Income Tax Reimbursement Allowance (ITRA) and who is eligible to

receive it?• ITRA is an allowance to reimburse Federal, State and

local income taxes incurred incident to an extended TDY assignment at one location.

• An employee (and spouse, if filing jointly) who was in a TDY status for an extended period at one location, and who incurred Federal, State, or local income taxes on amounts received as reimbursement for official travel expenses.


When does travel become taxable?

• Per IRS Publication 463, long term assignments in excess of one year are considered to be income by the IRS and NASA is obligated to report all reimbursements as income to the employee from the point it can be reasonably determined that the assignment will exceed 365 days. (FMR 301-11.201)

• IRS Publication 463 states “A series of assignments to the same location, all for short periods but all together cover a long period, may be considered an indefinite assignment.”

• When it has been determined that travel will extend over 365 days, the NSSC will be notified so they may begin deducting federal taxes from the subsequent monthly vouchers. The amount of deduction is determined by the IRS for all taxable reimbursements. This information is then forwarded to DOI and must also be sent to the traveler for filing of their ITRA.


EXAMPLE ITRA WORKSHEET

EMPLOYEE NAME: SSN:CENTER:TA #: ITRA STARTED:

Tax Deductions for Extended TDY PAY GROSS EXT FUNDS PERIOD

TRAVEL # Month VOUCHER Taxable WTA TAXABLE New Voucher F/WH FICA HIT State Tax TDY BACK Net to ST COMM. VID G/L REPORTAMOUNT Amount AMOUNT Total DED. DED. DED. DED. TAXES TAXES Travler DOC. # ACCT TO DOI

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

-$ -$ $0.00 $0.00 -$ -$ -$ -$ -$ -$ -$

TOTALS $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -$ -$ -$

SUBMITTED BY: DATE:


Example Form D-4A Certificate of Nonresidence in the District of Columbia


What is considered a break in service?

• If the initial expectation is made to be long-term taxable travel and a non-temporary work location, it will always be taxable unless, there is a break in service for seven continuous months.


Is the ITRA I receive taxable income?

• Yes. The amount received must be reported as taxable income in the year in which received, but you are eligible to receive an allowance to cover the taxes assessed on the ITRA under FTR 301-11.528.


QUESTIONS?

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