Career Path > Tax Q&A
Taxes for Travelers
Already Gone:
I am no longer a tax professional, but I do my own taxes and I get per diem. I have studied the rules until they are burned in my brain. What I can tell you is that tax "professionals", such as I was, are not extensively trained and have zero knowledge of per diem until they have to deal with it. Then, they do what everyone else does; they look it up. All the publications available to them are also available to you at:
www.irs.gov
alphadude:
all perdiam is a deduction unless u have no home and your employer reported it as income.. them u are screwed, its fully taxable then...you may even take more than the provided perdiam if you can prove your expenses.. dont forget the cost of job hunting, phone calls, lost deposits etc
UncaBuffalo:
I am test-driving the 'consultant' route, and learned something interesting about paying taxes quarterly:
The taxes for the 1st & 4th quarter are due 15 days after the end of each quarter.
The taxes for the 2nd & 3rd quarter are due 15 days before the end of each quarter.
Guess who was late on their 2nd quarter payment? :(
Already Gone:
--- Quote from: alphadude on Jul 09, 2007, 05:37 ---all perdiam is a deduction unless u have no home and your employer reported it as income.. them u are screwed, its fully taxable then...you may even take more than the provided perdiam if you can prove your expenses.. dont forget the cost of job hunting, phone calls, lost deposits etc
--- End quote ---
Let's get this straight;
Per diem is NOT a deduction. It is not an expense or income. It is a REIMBURSEMENT for your legitimate meals, lodging, and incidental expenses while away from your tax-home for business purposes.
As such, it is "neutral". You don't have to pay taxes on it, and you don't get to deduct the expenses either. However, you do get to deduct the other employee business expenses that are not covered by per diem; such as lodging and meals in excess of your reimbursement, rental cars or mileage that are not reimbursed, parking, laundry, supplies and equipment required by your employer, ... etc.
Where the confusion comes in is the part known as "substantiation". This is where you are required to prove your expenses if you deduct them. If you are given a per diem allowance, AND that allowance does not exceed the federal maximum for th area, then you can claim the amount of the allowance as your meals and lodging expense with no other documentation (except you have to document the reason that you are entitled to this reimbursement --- keep a log of where you were and when.) In other words; the per diem allowance given to you by your employer, if it does not exceed the federal rate, is proof in itself of the lodging, meals, and incidentals without the need for receipts. It works out to a ZERO SUM.
Example: You go to a place where the CONUS rate is $99/day. Your employer gives you $85/day. You spend less than $85/day. You can claim an expense of $85/day and a reimbursement of $85/day -- leaving you with zero to deduct. But, it gets better. You actually claim your laundry, car expenses, et. al. and come up with a few hundred bucks a year to deduct.
Example 2: Same as before, but you spend between $86 and 99/day on meals and lodging. You have RECEIPTS for all of this. You can deduct the difference between what you ACTUALLY PAID and have proof of, and the $85. Plus you can still deduct the mileage and laundry, etc.
If you spend more than the $99/day and have receipts, you still may get the full deduction if you can show a good reason why you had to spend so much (i.e. the local hotels raised their prices because there was a NASCAR race that week)
DO NOT use the tired old argument that you can deduct difference between the federal rate and the rate you were paid. The IRS regulation does NOT allow this. They allow exactly what I posted above. If you try to claim expenses greater than your per diem, you need receipts PERIOD!!!
If your employer does not give you a separate per diem allowance, but includes it in your pay, then your actual expenses are deductible without having to subtract any reimbursement.
I use an MicroSoft Exel spreadsheet for all this and just print it out when I do my taxes. You could just use a calendar or a logbook.
ladyinrad:
BeerCourt:
That was very well said. I applaud you!!!!!! You just summarized Publication 535,Business Expenses.
Can you explain the difference in the Accountable and non-accountable plans?
ladyinrad
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