41 C.F.R. § 301-11.535   How should we calculate the ITRA?


Title 41 - Public Contracts and Property Management


Title 41: Public Contracts and Property Management
PART 301–11—PER DIEM EXPENSES
Subpart E—Income Tax Reimbursement Allowance (ITRA), Tax Years 1993 and 1994
Agency Responsibilities

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§ 301-11.535   How should we calculate the ITRA?

(a) Use the documents prescribed in §301–11.531 to calculate the ITRA as follows:

(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 Appendices A, B, C and D to part 302–11 of this title; and

(2) Add any penalty or interest for tax years 1993 or 1994 only to determine the full ITRA payment; or

(b) As calculated in the following illustration.

Example of calculating an employee's tax return using the marginal tax rate schedules in Appendix B to part 302–11 of this title:

        For Tax Years 1993 or 1994 (Married Filing Joint Return)------------------------------------------------------------------------                                             Original      Recalculated------------------------------------------------------------------------1. Adjusted Gross Income (w/ travel              $75,246         $75,246 reimbursement).........................2. Subtract travel reimbursement........  ..............        (15,482)3. Subtract personal exemptions and             (12,689)        (12,689) itemized or standard deductions........4. Adjusted taxable Income..............          62,557          47,0755. Tax liability on adjusted taxable income:    a. Federal..........................          17,516         $7,061*                                                   (28%)           (15%)    b. State, VA (5.75% tax bracket)....           3,597           2,707    c. Local: Not applicable............               0               0                                         -------------------------------    d. Total............................          21,113           9,7686. Difference of total of column 1 minus total of column 2:    Additional Taxes Incurred due to     travel reimbursement_$11,3457. 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_1,500Total 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.

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