The two different approaches a college might decide to take when it comes to a Taxable Fringe Benefit (TFB) that appears on an Expense Report are:

• Taxable Fringe Benefit AP - Used to identify items that are considered a taxable fringe benefit and should be paid out through an AP pay cycle like a regular T&E reimbursement: these items should be marked as reimbursable on the Expense Report.

• Taxable Fringe Benefit PY - Used to identify items that are considered a taxable fringe benefit and should be paid out through the standard Payroll process and not through T&E: these items should be marked as non-reimbursable on the Expense Report

The most common instances of this happening from a Travel perspective is when a person makes a day trip but is in travel status for at least 11 hours.

For example, if you were to drive 30 minutes to Pierce College, work for there for 10 hours, and then drive 30 minutes back home without staying in a hotel overnight you would have taken a day trip while being in travel status for 11 hours. In this situation you would be entitled to be paid for a full day's meal per diem ($71), but it would be as a TFB payment to you instead of an expense reimbursement. What's special about a TFB is that it has to be added to your W-2 as taxable income, and that kind of addition can only be done through Payroll in HCM. The goal of both of the approaches noted above is to get these TFB amounts onto tax forms, but what makes them different is how T&E and Payroll work together to reach that goal.

With this approach, we're saying that the TFB amount is going to paid through Accounts Payable. In other words, the TFB is going to be entered on an Expense Report - with the "Taxable Fringe Benefit AP" Payment Type - as a "Reimbursable" line item, so it gets counted against an issued Cash Advance and/or paid out to the Traveler. Because the payment is issued through Accounts Payable (i.e. issued as a payment to a Supplier), Payroll doesn't have a way to identify that as a TFB for an Employee and therefore record it on that Employee's W-2. In order for that to happen, colleges can run the CTC_EX_PAID_TFB query and find those Paid line items that have that "Taxable Fringe Benefit AP" Payment Type. An HCM user can then use the amounts on those line items to make a manual adjustment to the Traveler's W-2.

This was not the favorable approach because the manual W-2 adjustments need to be done; the person making the adjustments has to make a handful of different calculations for a single TFB to adjust the right W-2 boxes by the right amount. Still, it's the fastest way to get people paid for these kinds of items, and sometimes that need to get a payment made quickly is preferred even if it means more downstream work.

With this approach, we're saying that the TFB amount is going to paid through Payroll. This means that the TFB is going to be entered on an Expense Report - with the "Taxable Fringe Benefit PY" Payment Type - as a "Non-Reimbursable" line item, so it gets acknowledged as something that was part of the trip (and can be seen and signed off on by T&E Approvers) but doesn't get paid out to the Traveler through AP. Again, the colleges would run the same CTC_EX_PAID_TFB query but this time they would pick out the "Taxable Fringe Benefit PY" Payment Type line items. An HCM user would then enter these line items as Additional Pay for the Traveler that would be added to their next regular pay check.

The advantage to adding these as Additional Pay items is that it will appear on the W-2 and all the necessary calculations are done automatically through the Payroll process. People might have to wait a little longer to get paid, but adding Additional Pay is much easier for HCM than performing the manual W-2 adjustments.