Taxable travel expense reimbursements are subject to tax withholding and are required to be reported on Federal Form W-2. Taxable travel reimbursements are normally entered into the Central Accounting System (CAS) on a travel voucher with a payment to the traveler coded with ‘T’ in the IRS Code, and the amount subject to reporting and withholding entered in the IRS Amount field. Taxable amounts are then sent from CAS to PayServ where these amounts are subjected to tax withholding and included in wages on W-2s.
To prevent a large amount from being erroneously subjected to W-2 reporting and tax withholding, there are CAS edits that prevent the IRS Amount from being larger than the payment amount. For example, if a voucher reimbursed an employee $30 for personal car mileage and $50 for a taxable meal, the CAS would allow up to $80 to be entered in the IRS Amount field of the voucher. However, if the employee used the State travel card to pay the restaurant for the $50 taxable meal expense, the travel voucher submitted by the employee for reimbursement would be for $30. Since the taxable expense of $50 would be greater than the $30 voucher submitted for reimbursement, only $30 could be reported as the taxable amount on the voucher.
When an IRS Amount exceeds the payment to the employee, agencies must enter Taxable Amount directly in PayServ as instructed below. The amount entered into PayServ will be either the entire Taxable Amount (i.e. no IRS Amount was entered in CAS) or the remainder of what was entered in CAS. In the example above, if $30 were entered in the IRS Amount on the voucher, the agency must report $20 taxable expense into PayServ.