Summary

What is changing?

Why is it changing?

How does this affect you?

Meal Rate Increases

Taxable Reimbursements

Travel Advances

Payment Schedule

Example

Important Considerations
  for Employees

Reimbursement Changes Brochure

What is changing?

• Tax Withholding

Because of IRS regulations, the State of South Dakota must withhold FIT (federal income tax), Social Security, and Medicare from some types of supplemental pay at the time of payment.  (IRS Circular E, Publication 15, page 12)

We have always been reporting the earnings on your W2, and you have been paying the FIT in the past, just at the end of the year when you file your tax return instead of during the year when it is required to be paid.  We have not been withholding the OASI (Social Security and Medicare) nor has the state been contributing the employer's share.

• Payments made through Payroll

In order to withhold taxes, these payments will need to be made from the payroll system.  In order to avoid confusion about some reimbursements coming from one place and other reimbursements coming from another place, ALL employee payments will be issued from payroll.

• Meal Rate Increase

To help offset having to pay the Social Security and Medicare from certain meals (only those where you do not travel overnight) the state Board of Finance is increasing the reimbursement rate by $3 per day.  For in-state travel, $2 of this increase goes to raise the rate for lunch from $7 to $9.