OVERVIEW
UC Davis employees may be eligible for reimbursement of dependent travel expenses and additional dependent care costs incurred due to official university business travel. Reimbursement is available in limited circumstances and requires prior approval.
Tax Law Requirement - Employer-paid pre-approved dependent care travel costs are required by Federal and State tax law to be treated as imputed income. BFB G-28 is UC guidance on travel.
The Supply Chain Management Pre-Approved Dependent Care Travel Costs page provides more information on the program and its respective processes.
Please be aware that ALL dependent care travel expenses and reimbursements are taxable to the employee. Due to Payroll reporting deadlines, claims for employee moves or trips, including taxable payments/ reimbursements, must be fully approved within the same calendar year in which the employee is taxed. If the expense report is submitted but not approved by November 13, it will be held and processed for payment in January 2026.
Impact on employee pay - Imputed income must be added to an employee’s regular pay cycle to be correctly reported and subject to withholding. Income tax withholding will be based on the graduated income tax withholding tables driven by the individual’s W-4. The addition of imputed income to a regular pay cycle may drive the withholding for the entire paycheck into a higher Federal withholding percentage. It can have a significant impact on net pay. Net pay impact can be calculated using the tool available at: https://www.paycheckcity.com/
Process
The Tax, Compliance and Controls team will be notified by the Supply Chain Management team and then determine the total amount received that is subject to being imputable income.
Imputed income implementation:
- Once TCC is notified, the income will be imputed within the next appropriate pay cycle.
FAQ
- Are these reimbursements taxable?
- Dependent travel and dependent care reimbursements are considered taxable income under both IRS and California tax laws.
- What is the Impact to my Paycheck? What is meant by "imputed income"? What is the impact?
- Imputed income occurs when the value of a transaction is added to your taxable wages and subsequently, the corresponding taxes are withheld from your paycheck. Imputed income will reduce your net pay by the amount of the corresponding taxes on the paycheck it was recorded on.
- What will the tax rate be? How do I know how much I will be taxed?
- The tax rate will be the same as the tax rate of the employee's income, based on the W-4 on file as well as the employee’s FICA eligibility. An employee can utilize the tax withholding estimator https://www.irs.gov/individuals/tax-withholding-estimator to determine the impact of the imputed income.
- Can the college or departments cover tax withholding so this is not taxable to me?
- No, as explained in the policy provided by Supply Chain Management
- I am a prospective UC Davis employee and not currently employed by UC, so will this process also impact me?
- Yes, reimbursements for prospective employees will be reported on IRS Form 1099-MISC.