Magazine article The CPA Journal

New per Diem Rates for Employee Travel Reimbursement

Magazine article The CPA Journal

New per Diem Rates for Employee Travel Reimbursement

Article excerpt

Instead of reimbursing actual expenses for away-from-home lodging, meals, and incidentals, an employer may pay a per them amount to an employee on business travel status. If the amount paid does not exceed IRS-approved rates, and if the employee provides simplified substantiation (time, place, and business purpose), the per diem reimbursement is treated as made under an accountable plan (not subject to income or payroll tax withholding and reporting). The per diem rate varies from locality to locality, so employers may use a published high-low per diem, which specifies one uniform per them rate for all high-cost areas within the continental United States and another rate for all other areas.

Effective October 1, 2001, through September 30, 2002, the IRS has announced in Revenue Procedure 2001-- 47 the following high-low rates:

The lodging portion of the high-cost per them is $3 higher than it was for the year ended September 30, 2001, and the lodging portion of the non-high-cost per them is $1 higher. The meal and incidental rates are unchanged.

An employer can continue using the prior high-low rates from October 1, 2001, through December 31, 2001, provided it does so consistently for all employees reimbursed under the high-low method.

Meal and incidental allowances are subject to the 50% deduction limit on meal expenses. Therefore, a high-cost area per them deduction is equal to $183 [$162 lodging plus $21 (half of $42)] and a low-cost area deduction is equal to $108 [$91 for lodging plus $17 (half of $34)].

Revenue Procedure 2001-47 also lists the high-cost localities, which are updated annually. …

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