If you are self-employed, and travel away from home on business, you can deduct certain expenses, like meals or lodging, that you ordinarily could not. If you have employees who travel, and you reimburse them for travel expenses like food and incidentals (e.g., you can also use the per diem rates so long as you reimburse the employee at the per diem rate.
Keeping all receipts on the road can be difficult, so the IRS has a per diem deduction as a safe harbor: so long as you can prove: you were traveling away from home on a certain day for business, you can claim the per-diem deduction. If your employee was traveling, you may also use the per diem method, so long as you prove that your employee was traveling on your business, and you reimbursed the employee at the per diem rate.
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The IRS per diem deduction is calculated to include the reasonably anticipated costs of either lodging, food, & incidental expenses OR food & incidental expenses OR incidental expenses only. This is useful: its easier to track lodging than food and incidentals, and its easier to track food than incidentals.
Taxpayers who are in the transportation industry, like truck drivers, have a special Meals & Incidental per diem rate of $66/day within the lower 48 and $71/day outside of the lower 48.
Taxpayers, regardless of industry, may claim an incidental expense only per diem of $5 per day.
Taxpayers, regardless of industry, may claim a meals & incidental expenses per diem of $60 per day within the lower $48, or $71 for certain high-cost locations in the lower 48 (Washington, D.C., Montgomery County, Prince George’s County and Ocean City during July and August are all examples of high-cost locations).
The U.S. General Services administration website also has a per-diem lookup feature. That is intended for use by government employees, but may also be used by taxpayers for travel per diem purposes.
Eric M. Bielitz is an associate attorney at S.H. Block Tax Services, Inc. His practice focuses on representing taxpayers before the IRS and Comptroller of Maryland who are being audited or owe back taxes. This article is for informational purposes only and is not legal advice. Mr. Bielitz can be reached at 410.727.6006 or ebielitz@mdtaxattorney.com
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