Twists

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Twists Turns of Travel Other Payroll Expenses

• Thursday, May 29, 2008
• 1000 1130 am
• DPHHS Auditorium

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Agenda

• Travel Policy Reminders
• Tax Regulations
• Utilizing HR system to Pay employee expenses
• Taxation of Certain Expenses
• Resources

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In regards to travel

• Major budget consideration
• Always consider
• Efficiency of travel
• Economy of travel
• (1-0300.00)

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Travel Policy Applies To.

• Elected officials
• Appointed members of boards, commissions or
  councils
• Department directors
• All other state employees
• Unless covered by separate statute
• (1-0300.10)

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Considered to be in travel status when

• Per the IRS, employees are considered traveling
  away from home if their duties require them to
  be away from home substantially longer than an
  ordinary days work and they need to sleep or
  rest to meet the demands of their work.

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Tax Home

• Generally, your tax home is your regular place of
  business or post of duty, regardless of where you
  maintain your family home. It includes the entire
  city or general area in which your business or
  work is located. 

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Assignment away from main place of work

• Temporary Assignment
• Expected to last for one year or less
• Tax home does not change
• Considered to be in travel status
• Indefinite Assignment
• Expected to last for more than one year
• Becomes tax home
• Not considered to be in travel status

Notes (IRS Pub 463) If your assignment or job
away from your main place of work is temporary,
your tax home does not change. You are considered
to be away from home for the whole period you are
away from your main place of work. You can deduct
your travel expenses if they otherwise qualify
for deduction. Generally, a temporary assignment
in a single location is one that is realistically
expected to last (and does in fact last) for one
year or less. However, if your assignment or
job is indefinite, the location of the assignment
or job becomes your new tax home and you cannot
deduct your travel expenses while there. An
assignment or job in a single location is
considered indefinite if it is realistically
expected to last for more than one year, whether
or not it actually lasts for more than one year.
In either of these situations, you must be out
of the city or general area of your original tax
home.
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Travel Policy does not apply to

• Commuting costs
• Meals provided at meeting or conference when not
  in a travel status
• Non-business related expenses
• Tips and taxes on meals
• Travel within the same general vicinity as your
  home or headquarters (mileage/meal reimbursement
  may apply)
• (1-0300.25 tips and taxes/misc expenses)
• (1-0310.20 and 1-0310.40 mileage reimbursement)
• (1-0320.10 meals

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Travel Shift

• Begins one hour before regularly scheduled work
  shift
• Ends one hour after regularly scheduled work
  shift
• To extent possible, travel within normal travel
  shift to reduce expenses
• (1-0320.10 travel shift definition)

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Mileage Reimbursement Rates

• Standard Rate
• 24.5/mile
• Defined as a of IRS standard rate
• High Rate
• 50.5/mile ( 0 lt 1000 miles/month)
• Equal to IRS standard rate
• Per IRS, applies equally to cars, vans, pickup
  and paneled trucks
• Low Rate
• 47.5/mile ( gt 1000 miles/month)

(1-0310.10 mileage rates)
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High rate to be used when

• State car not available OR
• Includes either motor pool, state-owned or leased
  vehicle
• Personal vehicle is in the states best interest
  OR
• Legislators and members of the general public on
  official state business
• If these conditions are not met, you must
  reimburse for mileage at the standard rate.
• (1-0310.30 high rate allowed when)

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Exemptions from Standard Rate

• Specifically authorized at high rate
• Members of boards, commissions, committees, or
  advisory councils unless related to state
  employment
• Employees driving 25 miles or less in any
  calendar day

(1-0310.40 standard rate exemptions)
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Meal Reimbursement

• Must be in travel status for more than 3
  continuous hours
• Generally, must be at least 15 miles from
  headquarters or home, whichever is closer
• Rates do not vary by location for high cost
  locations.
• This applies to both the in-state or the
  out-of-state rate.
• Number of meals allowed depends on travel shift

(1-0320.00 general meal allowances) (1-0320.10
number of meals allowed)
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Meal Reimbursement not allowed when

• Normal travel shift was extended to eat
• Meal was included in the cost of a conference
• Meal was provided by the State or other
  governmental entity

(1-0320.10 meals during an extension of travel
shift)
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Lodging Reimbursement

• Rate is before applicable taxes
• In most cases, sales and/or bed taxes will be
  required to be paid. Each taxing jurisdiction
  governs how and to whom an exemption is granted.
• ALWAYS ASK FOR THE BEST RATE
• For example
• The State rate is 70, however the hotel is
  offering their rooms at 55 to all other
  travelers. The hotels are not required to charge
  the state the 70 rate (as some claim they are),
  the state will gladly accept a lower rate.

(1-0340.20 and 1-0350.20) lodge reimbursement
rates (1-0340.25 and 1-0350.30) lodging at actual
cost
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Tax Treatment for Employees

• Taxable Travel for Employees
• Any meal with no associated overnight stay
• SHOULD be reported on employees W-2 not 1099-MISC
• If not paid in HR system, then an adjustment must
  be submitted to HR for inclusion on the
  applicable W-2

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Non-Employee Travel Reimb

• Taxable if NOT reported under an accountable plan
• Must be reported on 1099-MISC

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Accountable Plan

• Travel Expenses
• Must be for business
• Must be reasonable
• Must be substantiated
• All excess reimbursement are repaid
• If above requirements are met, then the expenses
  are considered to be non-taxable to non-employee

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Policy

• Legislature
• Establishes laws governing travel
• DOA
• prescribes the policy
• Agencies
• responsible for adhering to the policy and
  providing effective managerial control

(1-0300.00)
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Policy Location

• State Travel Information link located on DOAs
  homepage
• http//doa.mt.gov/
• Travel Policy Page
• http//doa.mt.gov/doatravel/travelmain.asp

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Highly Recommend Entering Expenses in HR

• Reimburses employee through paycheck
• No need to set up employee as a vendor and keep
  track of expenses paid through Financials. Also
  no need to update both databases as addresses and
  last names change.
• Eliminate risk of employee receiving both a W-2
  and a 1099 from the State.
• Reduces manual tracking and keying and countless
  end of the year off-cycles.

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Timing an issue?SABRHS Financials warrants
issued daily, but SABHRS HR checks are only
biweekly.

• When pending travel approximate expenses are
  known approved, temporary travel advances can
  be included in paycheck.
• Once receipts are collected after the travel
  complete, offsetting entries can be recorded to
  itemize the advance.
• Any differences between the advance and actual
  expenses can be accounted for and paid/collected
  on the next check.
• Most employees who travel will have a ProCard to
  cover expenses.

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Business Process an issue?

• Contact Human Resource Information Services to
  see what can be done to make paying expenses
  through the HR system feasible for your agency.
• payroll_at_mt.gov

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Steps to Enter Expenses in SABHRS HR
Payroll for North AmericagtMontana Payroll
ProcessesgtExpense Entry
Entering expenses in HR is completed on one
screen type expense code used, Task Profile ID
to charge the expense, and the amount of the
expense. Then Save.
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Approving Expenses

• Payroll for North AmericagtMontana Payroll
  ProcessesgtExpense Finalization

Approving expenses is also completed on one page,
and can be completed one employee at a time or by
all employees in your agency who have expenses.
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Once reviewed, you can approve one at a time by
selecting each checkbox as you go or select
Finalize All. Then save your changes and you
are done.
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Travel Expense Tax Calculations

• A complete listing all Time Reporting Codes and
  Expenses and how each are taxed can be found on
  SABHRS Documentation
• (MINE homepage gt SABHRS Documentation gt Human
  Resources gt Job Aides gt Crosswalk for
  TRCs/Earnings/ Deductions/Tax/GL Account Code )

The following slides detail how travel expenses
specifically are taxed
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Taxable Travelall at Supplemental Rate (25 for
Federal and 6 for State)
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Non-taxable Travel All remaining travel expense
codesare not taxed.
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Remember

• Changing W-4 to accommodate travel expense
  reimbursement has NO impact on the taxation of
  the check.

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Contacts

• Julie Feldman, State Accounting Division
• 444-3094 / jufeldman_at_mt.gov
• Kathy Coey, Human Resources Information Services
• 444-5215 / kacoey_at_mt.gov
• Darci Harrison, Human Resources Information
  Services
• 444-5217 / dharrison_at_mt.gov

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Disclaimer

• The Department of Administration employees are
  not tax experts and do not attempt to provide tax
  advice or legal counsel.
• The information contained in this presentation is
  subject to change due to changes in policy and/or
  law.