Posted by BEST FINANCIAL GROUP LTD

New Per Diem Rates For Business Travelers

New Per Diem Rates For Business Travelers

Business travelers who incur expenses while traveling from home have new daily rates to justify some of these expenses. The new rates are in effect from October 1st, 2019, to September 30th, 2020. Recently, the IRS provided unique per diem rates for the period 2019-2020, including meals and incidentals for the transportation sector, the tax on expenses unforeseen - deduction of tax and commissions, and the list of locations where justification costs are high.

The updated rates apply to daily allowances paid to any employee as of October 1st, 2019, traveling on and after that date and replacing the rates.

Rev. Proc. 2011-47 provides the general rules for the use of a federal daily rate to justify the amount of ordinary and necessary expenses incurred for accommodation, meals, and incidental costs paid or incurred for travel outside the home. Taxpayers who use the rates and the list of locations must comply with the rules of the Rev. Proc. 2011-47.

Understand how payments made during the week can avoid problems with employees who have to pay income taxes without pay. If employee travel allowances are used, anything you pay to employees that exceed the daily rate is subject to employee taxes.

How daily rates are determined

In the United States, the General Services Administration (GSA) sets the daily rate for each city and state and travel abroad. The daily rates vary according to the increase in costs and vary according to the geographical area in which the employee travels. The costs for hotels, meals and other travel expenses can vary considerably from one city to another.

Daily rates are updated annually, usually on October 1st. The Ministry of Defense and other federal agencies use the GSA's regular quota program. You can view the daily rates on this General Services Administration website: https://www.gsa.gov/travel/plan-book/per-diem-rates. 

The per diem rates are essential for employers because employee reimbursements that exceed the per diem rates are taxable to employees as income. Employers must have a plan responsible for reimbursing their employees' expenses to comply with the IRS regulations regarding daily expenses.

Current rates per day

The IRS has announced special daily rates for 2018-2019. Prices include:

  • Costs of special meals and incidentals (M & E) in the transport sector;
  • The deduction commission for incidental expenses only
  • Rates and lists of cities and high-cost establishments.

How to read the daily rate chart

The information contained in the GSA Daily Price Chart (CONUS refers to the Continental United States, OCONUS refers to the Continental United States) is addressed primarily to United States Government officials but can be used by private employers who wish to use daily rates.

Now you can search for the daily table. You can search by state and city or zip code. You will see a breakdown of monthly accommodation rates, as well as the daily chart and the unexpected on the right. Some months may be different. This is the "maximum accommodation rate per month, taxes included." Commissions paid above the maximum are subject to income tax.

Make sure you use the correct table. CONUS for the United States, while the OCONUS represents outside the continental US. It is not possible to use daily rates for international travel.

Fees, refunds and taxes

The IRS claims that daily repayments are not taxable even if they exceed actual expenditures but do not exceed the federal rate. For example, if an employee is in Tampa for a conference in May 2018, he may request or provide the daily rate for that geographic area of $ 106, plus $ 54 for meals and unplanned expenses.

If you wish to use employee benefits, you must use them throughout the calendar year, but you can pay actual expenses or use the designated meal rate and unplanned expenses in some regions of the city.

It is also possible to cover meals and unexpected daily expenses if you pay directly for your accommodation, provide accommodation in kind or refund the actual accommodation costs. You can also use unplanned regular trips without accommodation fees.

Additional details, restrictions and IRS classifications

As always, with the IRS, there are many other details you need to know if you want to use plans for hired travelers. More info on Per Diem rates can be found on the internal revenue service publication \463: Travel, Entertainment, Gifts, and Cars.

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