The General Services Administration has issued guidance that will reimburse federal employees who relocated for the job and were forced to pay hundreds or thousands in moving expenses. The regulations apply to all federal employees who qualified for relocation reimbursements under the federal travel regulations and received “some or all reimbursements, direct payments, or indirect payments on or after January 1, 2018”.
The guidance is retroactive from the beginning of this year, so those who have already relocated in 2018, but were forced to pay the moving expenses will be reimbursed.
“Agencies are authorized to pay [Withholding Tax Allowance] and [Relocation Income Tax Allowance] to cover ‘substantially all’ of the increased tax liability resulting from receipt of the relocation expense reimbursements either paid directly or indirectly,” GSA Associate Administrator for Governmentwide Policy Jessica Salmoiraghi wrote in the bulletin.
Here are some relocation expense reimbursements that are now taxable:
- Shipment for household goods
- Air expenses for traveling to a new duty location
- Mileage for using your own vehicle to travel to a new location
- Lodging expenses during travel to a new duty location
GSA also said that agencies should update their internal relocation policies to comply with this new guidance, and they should reimburse employees who have already relocated in 2018 for moving mileage, according to the current published rates.
“GSA will continue to publish a moving expense mileage reimbursement, although the new tax law has suspended the ‘qualified moving expense deduction’ for moving mileage rate when a [privately-owned vehicle] is used by federal employees to travel to a new duty station,” this bulletin said.
Going forward, managers should adhere to the guidance until GSA issues a new federal travel regulation amendment to address changes in the Tax Cuts and Jobs Act. The tax act that Congress passed last year eliminated the deduction federal employees could previously take to alleviate the costs of relocating/moving their household items. Those moving reimbursements were being taxed as ordinary income and agencies had their employees foot the bill.
According to the Senior Executives Association, as many as 25,000 federal employees a year relocate for their jobs. Some even received bills up to $6,000.