Employee Travel Pay Rules: Heed Best Practices to Avoid Common Hazards

Include 2018 travel pay IRS guidelines in your policy

Travel Pay

Even small businesses have to contend with travel expenses from time to time, and there are a multitude of hidden traps that you can fall into. From messy accounting to travel pay laws, don’t let your travel and expense process threaten your company’s well-being.

Crucial: Ensuring that your company is compensating employees correctly for their time spent traveling on business is an important responsibility, according to the educational session “Travel Pay 2018: Handle It Correctly and Compliantly” by HR and payroll expert Clarissia Harris. You need to understand both the federal and state laws regarding travel pay, as well as what types of travel pay are taxable and how travel pay affects overtime calculations.

Here are a few tips to develop best practices for handling employee travel pay at your company:

Don’t Make Your Travel Policy Too Complicated

Must do: Make sure your company has a travel and expense policy in place – and ensure that the policy is clear and easily accessible for employees, advised a recent blog posting by GTI Travel. “Having a reasonable, unambiguous written travel and expense policy is essential to ensure that employees understand what is expected of them when traveling for business.”

You should also make your travel policy simple and straightforward, GTI recommended.

Avoid burdening employees with excessive reimbursement paperwork or a convoluted pre-approval process for every business trip. Stick to a more streamlined process with well-defined timeframes for submitting expenses, so that employees are more likely to comply.

Make Reimbursement Easy—and Enforce the Rules

You’ll want to make certain that employees know exactly what documentation and information they need to submit to get reimbursed, according to a SAP Concur article.

Smart: Review your expectations with company managers and finance team members so all staff involved in the travel/expense process understand the rules they’re holding employees to.

Additionally, ensure that employees know if your company has preferred vendors you want them to use while traveling. For instance, you might have relationships with certain vendors who give your company discounts, according to SAP.

Exceptions: Make note of other details, such as specific expenses that your firm does not count as “business” expenses, as well as the time limit for submitting expenses so you don’t have reimbursement requests for travel that occurred a year ago.

And don’t be afraid to enforce your travel and expense policies. Regularly audit receipts and expense reports to make your process work better and maintain a fair system, GTI recommended..

Include Laws in Your Travel Policy

Finally, remember to include the federal and state law requirements for travel pay in your policy, Harris stresses. Include the key elements of the IRS guidelines governing employee travel pay rules and your state’s applicable requirements.

Case in point: The IRS requires proof for claimed business expenses, and gathering this information can help your company avoid problems at tax time, GTI noted. Keep in mind that the IRS requires different types of information for different types of expenses. For instance, if you report entertainment expenses as a deduction, you must submit the company name and names of all attendees.

Also, make certain that your travel pay policy lists the state-by-state per diems, as well as what to do when federal and state laws conflict if you need to address multiple state issues, Harris noted.

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About Sarah Terry
Sarah is a writer and editor with 13 years of experience in online and print publishing. She specializes in covering highly regulated industries, including healthcare, public housing, and banking. She is currently editor of the compliance publication Assisted Housing Alert.