If the traveler takes a trip that does not require an overnight rest, the IRS requires us to record the meals reimbursed for that day as taxable
income on the employee's W-2 form.
On the Employee Reimbursement System, meals are recorded as taxable unless either the Depart Time or the Return Time shows as Overnight.
If there is both a Depart Time and Return time with an AM or PM designation, the system assumes this was a day trip, and records the meals
In the example below, the traveler took one trip from June 1st through June 3rd to Kentucky, which should not have resulted in taxable meals being recorded.
If it had been entered correctly, there should only have been times of day entered for when he left Ames (or whatever is his official station) and returned
to Ames. However, since he erroneously included the times of day he left and returned to the hotel on June 2nd, the June 2nd meals will erroneously be
included as taxable income.
Travelers and verifiers should check for this type of error before submitting the reimbursement for approval. To correct a situation like we see for
June 2nd, go to the Daily Expense Detail browse, click on the underlined date for June 2nd, and change the Depart and Return times to Blank / Blank /
If the primary purpose of a particular meal was to discuss business, the Yes indicator can be changed back to No if the traveler indicates
in the Other Comments box the name(s) of the other person(s) and the business topic discussed.
The default settings for Taxable Meals should never be overridden unless this information is provided for each meal exempted from reporting.
The Daily Expense Detail menu option (see the first image above) allows you to review which meals have been recorded as taxable before you submit
expenses for routing. Changes cannot be made to a Reimbursement after it has been routed, unless the Reimbursement is rejected by the approver.
The IRS requires us to report as taxable income any meal reimbursement not requiring overnight travel. Do not change the Taxable Meals indicator
from Yes to No unless the primary purpose of the meal was to discuss business with a client. Also, you should never change the Taxable Meals indicator
from No to Yes.
Group meals (for interviews, etc.) should be listed entirely in the Miscellaneous Expenses – Other field. The attendees and the business purpose
must be stated.
This page was last updated on February 16, 2016.
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