IRS requires employers to report
and withhold income and employment taxes from meal allowances
for non-overnight travel (day trips). The specific IRS rule
states that a taxpayer traveling on business may only deduct
meal allowances if the trip requires him/her to stop for
'sleep or rest'.
For example, a consulting engineer employed on per diem
basis who often left home early, ate breakfast on way,
ate lunch at work, and stopped for dinner on drive back
home to which he returned about 10 p.m. could not deduct
expenses of meals since he was not away from home to sleep
or rest.
Meal allowances which are not deductible are subject
to withholding of income and employment taxes and must
be reported on employee W-2's.
NOTE: Meal allowances on the first and last
day of an overnight trip meet the 'sleep or rest'
requirement and are deductible and therefore not reportable.
Finance Office Responsibilities include:
1) Identify employees receiving excess amounts;
2) For employees receiving excess amounts, prepare
Travel Vouchers according to Section 8.0140;
3) Maintain supporting documentation of all payments
made. Documentation may be necessary to answer employee
questions and for OSC audit; and
4) If additions or adjustments must be made after the
last payroll period in December, have your payroll office
contact the Payroll Deduction Section at 518-473-1989.
If adjustments are not identified prior to OSC's production
of W-2's, your agency will have to prepare amended W-2's.
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