Is the amount of meal allowances and supper money provided to an employee taxable income to him or her?
Author: Alice Gilman
No. An employer may provide occasional meal money to an employee as a de minimis fringe benefit. This is an exception to the rule that cash can never be a de minimis fringe benefit. These criteria must be met in order for occasional meal money to qualify as a de minimis fringe benefit:
- The meal money must be provided to an employee who works overtime;
- The meal money is provided to the employee to enable him or her to work overtime (e.g., the employee eats dinner while working overtime);
- The meal money is not provided to the employee on a regular or routine basis; and
- The meal money cannot be based on the number of overtime hours worked (e.g., $5 an hour).
An employee who travels on the employer's business may be given a flat, per diem meal allowance. Per diem meal allowances that do not exceed the IRS's per diem amounts are also tax-free to the employee.
Meal allowances provided to an employee under other circumstances are taxable and must be included in his or her income.