Career Path > Tax Q&A
Department of Labor and Per Diem Payments - The IRS continues its audits
radbrat:
There are quite a few tech's that claim per-diem as income and write off the difference in allowable (geographic) federal rates as an unrealized business expense.
traveltax:
--- Quote from: radbrat on Jul 16, 2014, 12:20 ---There are quite a few tech's that claim per-diem as income and write off the difference in allowable (geographic) federal rates as an unrealized business expense.
--- End quote ---
Not smart
OK- say you make 50K and have 33K in per diem (100/day x 330 days).
1) Exclude it from wages as presented on the W2- 50K in taxable income
2a) Include the 33K in income- 83K in income. 33K in deductions are split 60/40 for lodging/meals (19.8/13.2K)
2b) Meals are reduced by 50% (19.8/6.6)
2c) All business expenses reduced by 2% of income (19.8+6.6) - (83*.02)= 24.74K in deductions
2d) If no itemized deductions, then available business expenses must clear standard deduction of 6.1K for singles (24.74K -6.1K) = 18.64K in allowed deductions
Net =64,360 in taxable income
radbrat:
If I work 330 days then its 6 figures...why no itemized deductions?
traveltax:
--- Quote from: radbrat on Jul 16, 2014, 12:50 ---If I work 330 days then its 6 figures...why no itemized deductions?
--- End quote ---
"Why no itemized deductions" - keeps math simple. the business expenses are itemized deductions, but we need a starting place. The point is, claiming per diem and deducting it is not good. Additionally you are a bigger audit target
6 figures? 100K *2% is a 2k reduction in business expenses
One thing to add- you cannot deduct the lodging per diem on the GSA site- only actual expenses for lodging. Meals are fine
radbrat:
gotcha...tanx
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