Effective Dates: 05/16/2024 - Present Previous | Next

TN 24 (05-24)

RS 01401.360 Travel and Business Expense Reimbursements

A. POLICY — GENERAL

Advances or reimbursements paid specifically for traveling or for other ordinary and necessary expenses incurred in the employer's business are not wages. The employer must identify travel and other expenses either by making a separate payment or by specifically stating the separate amounts if both wages and expense allowances are combined in a single payment.

1. Beginning 1989

Advances or reimbursements for traveling or other employee business expenses are wages if the employee does not or is not required to:

  • •

    substantiate their expenses to the employer; and

  • •

    return amounts in excess of the expenses substantiated to the employer.

EXAMPLE: Company A pays an employee $500 a month ($6,000 total for the year) for business expenses. The employer does not require the employee to provide any proof of the expenses or to return any amount not used for expenses. Therefore, $6,000 will be included as wages on the employee's Form W-2.

2. Deemed Substantiation

A fixed rate of reimbursement, such as a per diem or mileage allowance, may be deemed substantiated if:

  • •

    the per diem allowance does not exceed the federal per diem rate for the area traveled to; or

  • •

    the mileage allowance does not exceed the standard mileage rate established by the IRS.

B. POLICY — PER DIEM AND MILEAGE ALLOWANCES

If the per diem or mileage allowance is more than the federal per diem or standard mileage rate, the difference between the two rates is wages unless the excess allowance amount is substantiated or returned to the employer.

C. PROCEDURE

Obtain per diem and mileage rates from the staff person in your office who is responsible for travel arrangements.

D. REFERENCE

Federal per diem rates are published by the General Services Administration in the Federal Travel Regulations. Federal per diem and standard mileage rates are also published in IRS Publication 1542, Per Diem Rates.

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0301401360
RS 01401.360 - Travel and Business Expense Reimbursements - 05/16/2024
Batch run: 05/16/2024
Rev:05/16/2024