Per Diem and Car Allowances
If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all of the following conditions apply.
Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business.
The allowance is similar in form to and not more than the federal rate (defined later).
You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1) within a reasonable period of time.
You are not related to your employer (as defined next). If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement.
If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. In this case, you must be able to prove your expenses to the IRS.
Regular federal per diem rate. The regular federal per diem rate is the highest amount that the federal government will pay to its employees
for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. The rates are different for different locations. Your employer should have these rates available. (Employers can get Publication 1542, which gives the rates in the continental United States for the current year. Publication 1542 is available on the Internet at www.irs.gov
Allowance less than or equal to the federal rate. If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount.
Note that NOWHERE in the tax code will you find anything that says that you can deduct expenses in excess of your actual expenses - regardless of the federal rate.
I had two CPA's as clients. Most CPA's do not do personal income taxes. They contract them out, hand them over to employees who are not CPA's, or don't touch them at all. If you find a CPA with a shingle out, who does taxes, he/she is probably retired and doing it as a side business. They also rely heavily on software. TaxWise is the professional program most commonly used by accounting firms.
If you blew this by an IRS auditor, that's no surprise either. They are mostly entry-level seasonal employees or contractors. They are no more experts on YOUR tax return than the CPA who has done cost accounting for the local trucking firm for 30 years. The thing is that YOU need to be, because it is your life, your money and your name on the line.
If you get $85, and the fed rate is $120, and you don't have any proof that you exceeded $85, you can't deduct anything. You never claim per diem that is below the federal rate as income unless you are paid the per diem when yuo are not entitled to it, or your employer's plan is non-accountable. Anything you are told to the contrary is WRONG.