[Comments on Air Force Employee's Claim for an Additional Relocation Income Tax Allowance]

B-256731 Nov 08, 1994
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An employee claims an additional amount for Relocation Income Tax (RIT) allowance because his agency did not include his military retired pay in the calculation of his gross income which is to include earned income. The Federal Travel Regulation (FTR) defines "earned income" to include salary, wages or other compensation that is reported on IRS Form W-2. Although at the time the FTR provision was written retired pay was required to be reported on Form W-2, it is now reported on IRS Form 1099. However, the basic characterization of retired pay as earned income has not changed. Therefore, if the employee is able to document the amount of taxable military retired pay he received in the relevant year, the agency should include this in his total earned income and recompute his RIT allowance accordingly.


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