Posted by Valderas Financial Solutions LLC

The Concept of Per Diem Rates And How Does It Help?

The Concept of Per Diem Rates And How Does It Help?

Per Diem rates are popular in the United States, but fewer people have been using it. It is the allowance which is received by the people on a daily basis with having the travel expenses included. There are two main components which are included in the per diem rates. The first one is for lodging and the second is for the meals and incidentals. 

Within the US, paying per diem rates is one high cost which the government has to bear. It is a high cost which the employer bears for the employee whom they are sending somewhere out of the station. 

Travel Expense 

The travel expense which is covered by the government is known as per diem rates. The tables are made for the employees who work for the federal but IRS is allowed to use it for the employees who work privately as well. It helps them to get the availability of daily expense for traveling. 

If the employer is making use of the per diem rates, then the employee’s rate gets taxed for any payment which is made to them. There are rates which are designated in the US for every state and the travel which is done to foreign countries. The change in the per diem rates usually occurs by the first of October every year. 


There are agencies which get together to set the rates. Those rates are visible to the people who can view on the public website of IRS anytime they wish to. 

There is information for the employees who work for US government. They can understand it, and the private employees have to get the comprehension of it sooner or later if they are using it too. 

As there are many rates shared, you can locate yours by searching through the zip code and the state. The rates will lodge down with providing you the meals and incidental information as well. There will be taxes charged for the maximum limit of the lodging. 

If you are making use of the per diem rates for the employees, then it needs to continue for the entire year. You cannot only use it for a month and then leave it aside. It needs to have the consistency of the entire year with the same rate. 


There are many restrictions which may apply to per diem rates, but that may depend upon the company. If you are not sure what you can do related to the per diem rates and your employer is not offering you, then it is time you contact a professional. 

You can contact a tax preparer who will be able to analyze all the information with the company and their records. A certified professional can be hired for both ends either the employee or the employer. There are no restrictions upon that so you can make the right decisions. The taxes will be on the end of an employee even if the per diem rates are selected by the employer solely. 

Record Keeping

There is no burden of keeping the record of the employees with the per diem rates. It helps the employees to maintain their travel expenses on their own. A set rate is given to the employees who are in the records of the companies. Even if they do not want to receive the receipts for it, it can be presented to them. 

It helps the employee to have a wide choice among the hotels and restaurants. Where they wish to stay and eat, they have a variety of options with the help of per diem rates through their employer. If the employee prefers to book high priced accommodation for their stay or costly restaurants beyond the rate, then the company is not responsible for that matter. 

Similarly, if it is below the rate which is defined by the employer, then the company has no concern as well. It needs to be exact or near to what the company defines for the employee. It helps the employees to become a part of the company by managing their travel expense. The employees get the amounts which are fixed; they need to keep a track for their meals and the allowance which is left for them from the employer. 

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