Employee Business Expense - Tax Implications

The prompt reimbursement of employee business expenses.

The Internal Revenue Service (IRS) requires employee business expenses to be submitted for reimbursement within 60 days after the expense is incurred or the trip ends. If the request for reimbursement is not submitted within 60 days, the reimbursement becomes taxable income for federal, state, FICA, and Medicare tax purposes. Thus, withholding taxes must be taken from the reimbursement.

More Information on Our University Travel Fountain SharePoint Site

Although the university's policy has been to require that employees submit expense reports to their supervisor for approval within 5 days after incurring the expense or after returning from their trip, we have noticed that some employees hold off on submitting their reimbursement requests until the end of a semester. In light of this requirement, it is important that all employees submit their requests for reimbursement of business expenses promptly.

Not doing so is an additional cost to both the employee and the university as the university must match the FICA and Medicare taxes paid by employees.

Thanks for your assistance in helping the university comply with these policies.