Withholding Tax Allowance

WITHHOLDING TAX ALLOWANCE

(FTR, Part 302-17)

You are authorized a withholding tax allowance. If you elect the WTA, it is computed and paid on each claim that has taxable allowances (and is itself a taxable allowance). It is treated as an advance against Relocation Income Tax Allowance (RITA), and is subtracted from any RITA computed in the following year. If WTA is elected (and WTA allowance is issued), you must file a RITA claim within 120 days of the following calendar year. Failure to file a RITA claim results in collection of the WTA. If you decline to have WTA paid on each claim, the entire tax allowance is paid in one lump sum on the RITA claim.

WTA is paid at a rate of 33.33 %. When deciding whether or not to elect WTA, you should consider the following:

a) If you anticipate your federal tax withholding rate to be 25% or greater for the calendar year for which you received the majority of your PCS reimbursements, you may want to elect to receive WTA.

b) If you expect your federal tax-withholding rate to be less than 25%, you may want to decline the WTA to avoid possible overpayment of WTA.

When a RITA claim is filed the following calendar year, the entire amount of any excess WTA must be repaid. Complete the WTA selection form and fax to DFAS-JTBAD/RO 216-367-3422/3423/3424.

Below are examples of claims paid without and with the WTA at 33.33 %.

Allowance computed without WTA:

In this example, the amount of WTA issued is shown as $333.30. You should set aside this amount until taxes are due to the IRS the following year.



Page updated Jan 15, 2013