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Taxable Meal Reimbursement

(For Meals While NOT on Overnight Stays)

The Internal Revenue Code allows an exclusion from an employee’s income for employer reimbursement of travel and other business related expenses. This exclusion is permitted for ordinary and necessary expenses incurred while traveling "away from home" in pursuit of a trade or business. The Internal Revenue Service and Tax Courts have consistently held that to be considered "away from home" the traveler must be away overnight.

If an employee is reimbursed for these expenses while not in overnight travel status, then IRS rules require that the employer treat those amounts as taxable wages to the employee.

Current University policy does not permit employees to receive reimbursement for meals without requiring an overnight stay. With the added capabilities of SAP, the University is now able to reimburse employees for meals claimed as a result of one day travel. These reimbursements will be treated as taxable wages to the employee and will be reported on the employee’s W-2.

Beginning January 1, 1999, reimbursement of meal expenses for one day travel will be allowed. Taxable reimbursements will be made through the Payroll system whereas regular nontaxable reimbursements will continue to be reimbursed through the Travel reimbursement checks. Employees claiming meal expenses will see the reimbursement on their earnings statements in the Taxable Meals section. This amount will be taxed at 28%.

As stated in the Travel and Entertainment Manual, "To claim the cost of meals, an employee must be on university business before and after the following times: Breakfast, 7:00 am to 8:30 am; Lunch, 11:30 am to 2:00 pm; Dinner, 5:30 pm to 7:00 pm." In addition, meal expenses can only be claimed for travel away from the normal workplace.

If you have any questions regarding this change please call Kim Wagester in Payroll at 7388 or myself at 7367.