|Date Issued:||11/09/2010||Date Last Updated:||09/29/2010|
|Bulletin Name:||Year-End Procedure for Taxable Travel Reimbursements|
To update calendar year-end procedures relating to taxable travel reimbursements in order for the State to comply with IRS reporting requirements. This bulletin replaces Bulletin A-608/P-933.
Taxable travel reimbursement data is transferred from the Central Accounting System (CAS) to PayServ at month end, January through November.
For 2010, a special transfer from CAS to PayServ will be run on 12/10/10.
|Process for Year-End Taxable Travel Payments||
Taxable travel payments paid by the CAS from 12/11/10 thru 12/31/10 will be handled by an automated process when transferred to PayServ after 12/31/10. This process will add these amounts to gross wages on 2010 Form W-2s. No taxes will be withheld in 2010 for these payments, nor will these payments be included in the “Taxable Expense” reimbursement adjustment that is shown in the Administration payroll checks dated 12/22/10 and Institution payroll checks dated 12/30/10.
In early 2011, PayServ will initiate Social Security/Medicare tax deficiency deductions that apply to the 12/11/10 through 12/31/10 taxable reimbursements. Employees who have already paid the maximum 2010 Social Security amount will have only a Medicare tax deficiency deducted from a 2011 paycheck.
To avoid under-withholding of income taxes for 2010 and subsequent deductions for Social Security and Medicare tax deficiencies in 2011, agencies should work with their employees to accelerate the submission of travel reimbursement vouchers to OSC so that these are received, audited and paid no later than 12/10/10.
A special VOU943, Listing of Taxable Employee Travel Payments by Agency, for all taxable travel reimbursements made by the CAS between 12/01/10 and 12/10/10 will be produced on 12/10/10 and distributed to agencies. The 12/31/10 report will list only taxable travel expenses paid by the CAS from 12/11/10 through 12/31/10.
Example: The CAS issues Jane Doe a travel reimbursement check on 12/22/10, and $99.00 of the payment is taxable. Jane's pay stub for 12/22/10 shows year-to-date gross wages of $63,000. The 12/31/10 VOU943 will show an IRS amount of $99.00 for Jane Doe. Jane's Form W-2 will show gross wages of $63,099. In early 2011, the Social Security and Medicare tax will be calculated and withheld on the 2010 taxable expense of $99.00. No Federal or State income taxes will be withheld.
All corrections to excess amount payments on the PCM file must be made by 12/31/10, so that the amounts on the PCM010 can be reconciled with the excess amounts reported on employees' 2010 FormW-2s.
Other corrections that agencies choose to make to the PCM file must be made by 1/07/11 to be reflected on adjusted year-end reports.