I have seen several people taking Per Diem deductions (as published by GSA.gov) for both lodging and meals, some even on Schedule C!!. There are several articles on the net about how to do it and, it seems, a lot of confusion on what is allowed.
From what I read in Pub 463 and i2106, only reservists can take the lodging Per Diem deductions, and that would be on Schedule A. Normal employees cannot use the lodging Per Diem, only the standard meals (subject to the 50% limit) and incidental expenses deductions.
I have a friend who was told she could use the Per Diem lodging deduction based on the GSA tables (also for foreign travel) on her Schedule A as unreimbursed business expenses (the employer does not reimburse any part of those expenses). Could anyone please opine as to under which circumstances could one use the lodging Per Diem allowances (instead of the actual expenses) as an employee? I have seen opinions on both sides but most do not correspond to what I see on 463 and i2106.
asked 26 Sep '12, 23:00
Travel away from home for work or business that requires an overnight stay is allowed tax benefits.
Meals and incidental expenses (M&IE) rate:
Instead of deducting actual expenses incurred for M&IE while traveling, employees and self-employed individuals may deduct IRS-approved per diem amounts, provided they can document the time, place and business purpose for the travel. In 2011, this default rate is $46 per day (but the rate may need to be prorated, as indicated below).
Travel for Less Than 24 Hours:
When traveling to more than one location in a single day, the last stop of the day dictates the location and the per diem rate to use. On the first and last day of business travel, the standard meal allowance is prorated (reduced) by claiming 75% of the standard meal allowance. In 2011, this is $46 times 75% = $34.50.
Per Diem Substantiation Methods: The per diem rates set by the IRS for meals, lodging and other incidental expenses vary depending on the travel location. See IRS publication 1542 for more information: http://www.irs.gov/pub/irs-pdf/p1542.pdf
Per Diem rates are located here: (Make sure that you select the correct year)
The amount in the right column is M&IE. The amounts in the other columns are only for lodging reimbursed by an employer.
Lodging: A per diem allowance for lodging may only be used by employers for determining employee reimbursements and income exclusion. Employees and sole proprietors may not use the per diem allowance to substantiate a lodging deduction; actual receipts are needed.
Expenses for commuting to and from work are not generally deductible. However, they are deductible when going between a taxpayer’s home and temporary work location outside the metropolitan area where a taxpayer lives (temporary means up to a year), including any airfares.
Taxpayers can use either the M&IE rate or keep records of actual expenses for each business trip. However, the taxpayer must use the same method for all days within any single business trip (excluding any requirement for actual lodging expenses, above).
Incidental expenses: Employees and self-employed individuals who do not incur any meal expenses while traveling (generally because they are reimbursed) can use the per diem allowance for incidental expenses (IE) only (for any location, $5 per day for 2011). Incidental expenses include fees and tips given to porters, baggage handlers, maids and others, plus the cost of transportation to get meals if suitable meals are not available at the lodging or temporary duty site. It does not include expenses for laundry, lodging taxes and telephone calls.
answered 03 Oct '12, 18:51