Taxable Meals / Departmental Charges
When employees are reimbursed for meals while not in overnight status, the charge to the departmental cost center will include the cost of the meal reimbursement plus any related employer Social Security and Medicare tax on the reimbursement.
In most cases, the tax will be 7.65% of the meal reimbursements. If an employee is exempt from Social Security and Medicare taxes (most working students enrolled at least halftime), there is no additional charge to the department. If the employee has reached the Social Security wage maximum, the tax is 1.45%, which represents the Medicare tax.
As an example, an employee is reimbursed $30.00 for a day’s meals while not in overnight status. This reimbursement is subject to any applicable federal, state, or local income taxes in addition to Social Security and Medicare taxes. Since the Social Security and Medicare taxes have an employer cost, the department will see the following charges:
- $30.00 in a meals G/L account (740200, 740600, or 740700)
- $2.30 in a benefits G/L account. The tax of $2.30 is a result of multiplying $30.00 by 0.0765.