Lodging Per Diem

Rev Proc 2011-47 & Notice 2011-81 details the rules, effective October 1, 2011, for using a per diem rate to substantiate the amount of an employee’s expenses for lodging, meals and incidentals that an employer (or third party) reimburses, and explains how an employee or self-employed individual may use the “standard meal allowance” but not the lodging per diem.

If a payer (i.e., the employer, its agent, or a third party) pays a per diem allowance in lieu of reimbursing actual expenses for lodging, meal and incidental expenses (M&IE) incurred or to be incurred by an employee for travel away from home, the amount of the expenses that is treated as substantiated for each calendar day (or part of that day) is the lesser of the per diem allowance or the appropriate IRS-approved maximums. An additional requirement is that the employee provides simplified substantiation (time, place and business purpose). Where these tests are met, the reimbursement is treated as made under an accountable plan—it isn't subject to income- or payroll-tax withholding and isn't reported on the employee's Form W-2. Receipts of expenses aren't required.

An employee who is “related” to his employer isn't considered to have accounted to his employer for the full federal per diem allowances for lodging and M&IE, and must substantiate any deductions he claims, but he may use the meals-only per diem and the business standard mileage rate. Thus a self-employed individual can use the meal, incidental, and mileage per diem rates but not the lodging per diems.

 

February 15, 2017 by Lee Reams Sr.
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