When is a 1-day travel per diem reimbursement considered taxable?
Reimbursement for meal and incidental expenses when no overnight travel is involved requires that the reimbursement amount be reported to the IRS as taxable income to the employee unless a business purpose is stated for a meal and a list of attendees is supplied.
EXAMPLE: An employee travels from Philadelphia to UP. During the return trip from UP, the employee stops and eats lunch. If the employee requests reimbursement for the meal, the amount the employee is actually being reimbursed for the out of pocket meal or the amount of the PCARD Meal expense is the 1-Day Taxable Meal Amount and must be entered on the Fixed Meal entry that is created by the itinerary.
How to handle taxable meals for 1-day travel in an ERS report:
- In Report Header select the checkbox for "Does this report includes 1-Day Meal Reimbursement". This turns on the reminder for the taxable amount field on the Fixed Meal expense.
- Create the itinerary and the Fixed Meal expense for the per diem.
- In the Expense List, click on the Fixed Meal expense to open it.
- 1-Day Taxable Meal Amount field: enter the amount of the total cost of the meals for the day. This amount includes the amount reimbursed to traveler for out of pocket meals, incidentals, and any PCARD Meal amounts. NOTE: If per diem is reduced to actual spent the taxable amount is the actual spent amount (out of pocket plus PCARD Meals). It will be less than the original amount of the Fixed Meal entry.