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TRAVEL:
TAXABLE MEAL
REIMBURSEMENT GUIDELINE According
to IRS regulations, meal reimbursements are to be reported as taxable
income, unless the employee is required to incur overnight lodging or there
is a substantiated business connection.
When meal reimbursements are determined to be taxable, the Health
Department is required to withhold Federal income tax, social security
(FICA) and Medicare tax and to pay matching employer contributions for FICA
and Medicare tax. What
is a substantiated business connection? Non-overnight meal
reimbursement will be treated as non-taxable provided a substantial business
discussion occurs during the meal.
When seeking reimbursement for business related meals, employees must
document the purpose of the meeting, the time, location,
and who was in attendance. Example
#1: You
attend a meeting on behalf of the Health Department outside of the County,
but not requiring an overnight stay. The
meeting begins at 11:00 a.m. in the conference room of an office building
and the attendees agree to have lunch brough in at their own expense so the
business discussion can be continued through the meal period.
Your reimbursement from the Health Department would NOT be taxable. Example
#2: You
attend a meeting on behalf of the Health Department outside of the County
but not requiring an overnight stay. The
meeting begins at 11:00 a.m. in an office building and attendees break for
lunch at noon. You go to a
nearby restaurant with a couple of the meeting participants. Even if you discuss some business issues, the reimbursement
of this meal cost IS taxable. Example
#3: You attend a conference in the County, approved by your supervisor and
paid for by you with a credit card because notice of the conference did not
arrive in time for the normal Department requisition process to be
completed. The conference feel
is $100, which includes a lunch as part of the conference package.
You submit a Reimbursement Claim Form for the conference feel of
$100. The cost of the included
meal is NOT taxable to you. Will
this change affect other reimbursements such as mileage?
No,
this change only affects the taxability of meal reimbursement when
non-overnight travel occurs. How
will the employee be reimbursed?
In addition to receiving an accounts payable travel check for the
non-taxable expense listed on his/her monthly Claim for Expenses Form,
reimbursement of any taxable non-overnight meals will be paid through the
Payroll system with the payment included in the next regularly scheduled
paycheck. The Health
Department's new Claim for Expenses Form has an added column for
"Taxable Meals," with a new expense code object ### and a total
box for the amount to be reimbursed through Payroll. How
will the taxable meal expense appear in the accounting system? Reimbursement
amounts will appear under expenditure code ###-Taxable Meals Reimbursement
as a salary expense for the programs benefited.
The Federal taxes contributed by employees and by the Health
Department on the taxable meals income will be freflected as a benefits
expenditure for those same programs. Non-taxable
meals will continue to be expensed under Travel/Meals/Lodging. In
summary, this change is mandated by the IRS, so please assist us as we adopt
new systems to comply. |
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10/07/2004 03:15 PM
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