cut and paste is a wonderful thing... perdiam may be taxable if you exceed the conus or exceed the limitations of the perdiam.. if you dont have a perm tax home perdiam as provided by the employer is fully taxable as income.
So true. There are other times when per diem is taxable. For example: you take a job at a D&D site with no definite end date; you take a job at a site with an end date expected to be more than a year away but they pay you per diem anyway. If you take a "voluntary layoff" to "restart the clock" you are just kidding yourself. If you leave a site with the understanding that you will return and continue with the same job, it is still considered a continuous assignment - even if you work for someone else at another place during that time. You have to go with the understanding that you will not have a definite return to work date. (You can work at a site for more than a year with per diem that is not taxable, but you have to continue to expect the job will end within a short time. The very minute that your end date becomes indefinite you are no longer entitled to per diem. Likewise, a "voluntary" layoff is not a layoff. You would not be eligible for unemployment insurance during any period that you voluntarily left a job.)
The key here is that the job must have been temporary from the beginning and continue to be so as long as you get the per diem. If, at any time, the duration of the job is expected to be longer than a year or if the projected end date is unknown, it is no longer a temporary assignment.
It also has to be away from your tax home. If you have worked 10 or 11 months a year at SONGS1 for the past couple of years, the IRS is going to consider that your tax home. It makes no difference if you came there from somewhere else and intend to return. So, those of us who believe that we can work at one site for years on end with a month or so off every year are actually establishing that site as our tax home.
The following is the IRS rule for an accountable plan:
The following are the three requirements for an accountable plan:
1. There must be a business connection and the expense must be reasonable.
2. There must be reasonable accounting for the expenses.
3. All excess reimbursements must be repaid in a reasonable time.
For Test #2, amounts paid up to the allowable federal per diem rates for meals, expenses for incidental expenses and lodging are deemed substantiated, without the usual requirements for keeping records of the expenses with receipts.
As you can see, you do NOT have to account for your "excess" per diem as long as the payments are at or below the allowable federal rate. If the plan is "unaccountable" all payments are included in taxable income. It payments are made under an accountable plan (as defined above) your accountability is to the employer - not the IRS.
An example of this is that your employer pays more than the federal rate for meals and lodging. You must give him receipts or return the excess. (Note that rule 1 states that the expense must be reasonable. If the CONUS rate for an area is $99 for lodging and $49 for M&IE, you are not going to get away with staying at the Crowne Plaza and eating Champaigne and caviar with every dinner - no matter how many legitimate receipts you turn in to payroll.)
To translate: a plan is accountable if the employer either; requires receipts, holds you to reasonable expenses and requires you to repay any excess reimbursements; or pays you per diem at or below the federally allowed rates for qualified business related travel.
My biggest caution here is that you have to be careful and as honest as you can. The fact that you or "someone you know" has gotten away with some other way of doing this is no guarantee that it is the legal way. The IRS doesn't audit a lot of returns, but they can select a group and audit them all if a pattern emerges. They have 10 years to come and get the money, and the interest accrues during that whole time. The longer they wait to come after you, the more they can take from you.
If any of that makes any sense to anybody - then I must have said it all wrong.