301-11.535—How should we calculate the ITRA?
(1)
Determine Federal, State and local marginal tax rates by using the procedures and the marginal tax tables established for the relocation income tax allowance in §§ 302-11.7, 302-11.8 and the appropriate RIT tax table(s) located at www.gsa.gov/ftrbulletin; and
(2)
Add any penalty or interest for tax years 1993 or 1994 only to determine the full ITRA payment; or
Example of calculating an employee's tax return using the marginal tax rate schedules in the state RIT tax table(s) located at www.gsa.gov/ftrbulletin:
| Original | Recalculated | |
|---|---|---|
| 1. Adjusted Gross Income (w/ travel reimbursement) | $75,246 | $75,246 |
| 2. Subtract travel reimbursement | (15,482) | |
| 3. Subtract personal exemptions and itemized or standard deductions | (12,689) | (12,689) |
| 4. Adjusted taxable Income | 62,557 | 47,075 |
| 5. Tax liability on adjusted taxable income: | ||
| a. Federal | 17,516(28%) | $7,061*(15%) |
| b. State, VA (5.75% tax bracket) | 3,597 | 2,707 |
| c. Local: Not applicable | 0 | 0 |
| d. Total | 21,113 | 9,768 |
| 6. Difference of total of column 1 minus total of column 2: | ||
| Additional Taxes Incurred due to travel reimbursement—$11,345 | ||
| 7. Add to the tax difference: | ||
| a. Penalty Payment imposed by IRS tax year 1993—1,500 | ||
| b. Interest Payment imposed by IRS tax year 1993—1,500 | ||
| Total 6 and 7a and b = ITRA—$14,345** | ||
| * Adjusted taxable income places employee in lower tax bracket. | ||
| ** The ITRA reimbursement is taxable income for the year in which paid at the appropriate Federal, State and local income tax rates. | ||