Same Day Travel

Same Day Travel

Office of Controller – Travel Accounting

Following is a brief description of same day travel and the taxable implications related to reimbursements.

  • Please see below the IRS Publications 15B, 463, and 535 for more details.
  • Please see below the Employee Travel Guide for procedures related to processing same day travel.

Same Day Travel:

Travel that occurs and is completed in the same day does not meet the “traveling away from home” requirement of the IRS to be designated tax deductible. Therefore, per diem allowances for same day travel are considered wages.

Generally, the tax home is the employee’s regular place of business or official duty station, regardless of where the employee maintains a family home.

In order for a reimbursement of an expense for business travel to be excludable from income, including meals and lodging, a taxpayer must travel “away from home” in the pursuit of business on a temporary basis.

The phrase “away from home” has been interpreted to require a taxpayer to travel overnight, or long enough to require substantial “sleep or rest”. Thus, merely working overtime or at a great distance from the taxpayer’s residence does not create an exclusion for reimbursements for travel expenses if the taxpayer returns home without spending the night or stopping for substantial “sleep or rest.”

Example: An employee is required to travel from Dallas to Austin to work for the day. The employee leaves home at 6:30 A.M. and returns that night at 10:00 P.M. On the trip home the employee stops for dinner and rests in the car for two hours. Even though the employee has been away from home for substantially longer than his/her normal work day, the employee is not considered to be in travel status. The courts have ruled that stopping for a meal or a rest in a car does not meet the substantial “sleep or rest” rule.

Generally, these meals are taxable as wages to the employee because travel must be away from home overnight to be excludable.

Example: An employee is required to travel out of town to work for the day. The employer agrees to pay for the employee’s meals while away. The employee leaves home at 7:00 a.m. and returns home at 9:00 p.m. Before the employee returns in the evening, the employee takes a nap in his car for an hour.

Although the employee is away from his tax home for substantially longer than a normal work day and even stops for rest, the rest is not considered to be substantial. The employee is not considered to be away from home overnight. Any meal money that the employee receives is taxable as wages.

Reimbursements or allowances provided to employees for meals in the course of business may be excludable if the expenses are ordinary and necessary, and meet a Directly-Related Test.

Directly-Related Test – Meal reimbursements may be excludable from wages if:

  • the main purpose of the combined business and meal is the active conduct of business;
  • business is actually conducted during the meal period; and
  • there is more than a general expectation of deriving a specific business benefit at some future time.

All of the facts must be considered, including the nature of the business transacted and the reasons for conducting business during the meal. If the meal takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work.

The Meals & Light Refreshments Form must be completed when claiming meals that are directly related to work.  Please see the Meals & Light Refreshments Procedures for more information related to qualified meals.

Meal expense reimbursements or allowances must meet the accountable plan rules in order to be excludable from wages. There must be a business connection, documentation of expenses, and a requirement to return excess advances or reimbursements to qualify as an accountable plan. An employer may reimburse employees using an actual expense or per diem method.

Reimbursements for allowable business travel meals may be substantiated using either an actual expense method or a per diem method.

Meals while not traveling, such as meals with meetings, must be substantiated using the actual expense method.

Information taken from IRS Publication 5137 Fringe Benefit Guide 12/2/16