New Per-Diem Rates Go Into Effect – Reimburse Employees On Travel, Lodging, Meals

Lisa Nason- Per Diem Rates

The new per-diem numbers are now out, effective October 1, 2018. These numbers are to be used for per-diem allowances paid to any employee on or after October 1, 2018, for travel away from home on or after that date. The new rates include those for the transportation industry; the rate for the incidental expenses; and the rates and list of high-cost localities for purposes of the high-low substantiation method.

Per diem rates are a fixed amount paid to employees to compensate for lodging, meals, and incidental expenses incurred when traveling on business rather than using actual expenses.

Here’s how it typically works: A per diem rate can be used by an employer to reimburse employees for combined lodging and meal costs, or for meal costs alone. Per diem payments are not considered part of the employee’s wages for tax purposes so long as the payments are equal to or less than the federal per diem rate and the employee provides an expense report. If the employee doesn’t provide a complete expense report, the payments will be taxable to the employee. Similarly, any payments which are more than the per diem rate will also be taxable.

The reimbursement piece is huge because there is a big change this year in the way that employees may report their expenses. For the 2017 tax year, unreimbursed job expenses were deductible on Schedule A as miscellaneous deductions subject to the 2% floor. That means that they were deductible to the extent that they exceeded 2% of your adjusted gross income (AGI). Here’s an example: Let’s say that your AGI in 2017 was $50,000 and your job-related expenses totaled $3,000 for that year. For the 2017 tax year, you could have deducted $2,000 of those expenses. That’s because 2% of $50,000 is $1,000, and expenses over that amount ($3,000 less $1,000 = $2,000) would have been deductible.

However, the Tax Cuts and Jobs Act (TCJA) eliminated unreimbursed job expenses and miscellaneous itemized deductions subject to the 2% floor for the tax years 2018 through 2025. Those expenses include unreimbursed travel and mileage.

Have a tax question? Contact Lisa Nason.

 

 

Tax Partner with more than 20 years of experience preparing tax returns businesses and individuals, including income tax, property tax, state and local tax, sales & use tax, etc. We also work on estate and trust returns as well as assisting with tax planning, tax audits, and bookkeeping. We also help clients with general business advice and consulting as needed.

Nason Accounting, LLC is a Greenville, SC based full service certified public accounting firm that helps businesses and individuals increase and preserve their financial net worth. We provide accurate and timely accounting information that is vital for any individual or business.

We service clients both locally in the Upstate and throughout the Southeast. Our team understands the importance of great customer service, eliminating cumbersome bookkeeping stress, and making your success a priority. With experience in every imaginable accounting service, Nason Accounting, LLC is prepared to help you and your business with all of your financial needs.

Subscribe to TaxConnections Blog

Enter your email address to subscribe to this blog and receive notifications of new posts by email.



1 comment on “New Per-Diem Rates Go Into Effect – Reimburse Employees On Travel, Lodging, Meals”

Comments are closed.