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Travel Advisory
Office of Operations
Bureau of State Expenditures

Advisory Number: 2
Advisory Name: Taxable Travel
Date Issued: 05/13/2014 Date Last Updated: 10/14/2014
Subject:
Tax Consequences Associated with an Incorrect Official Station Designation

Reference:
Guide to Financial Operations, Chapter XIII Section 6 - Potential Tax Consequences of Assigning an Incorrect Official Station

Guidance:
This is a reminder to Business Units that an employee’s official station should, in virtually all cases be the employee’s tax home – the location where it is reasonably expected that the employee will spend more time working than any other location. 

When the head of an agency designates an official station that is not the same as the employee’s tax home, or an employee’s tax home changes without a corresponding change in the employee’s official station, there will likely be adverse tax consequences to the employee from the reimbursement of travel expenses, as the dollar amount of virtually alltravel expenses, including hotel costs and per diems, is taxable as income to the employee.  This income tax liability can be significant and unexpected for the employee, if the agency does not properly report the expenses as income and withhold taxes.

Guide to Financial Operations, Chapter XIII Section 6 - Potential Tax Consequences of Assigning an Incorrect Official Station and the related chart in Exhibit A can assist the head of an agency in understanding the personal income tax implications associated with an employee’s official station and monitoring official stations to prevent employees from unexpectedly incurring substantial tax liabilities.

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