Do not provide an allowance in excess of the IRS-approved rates: This could be reclassified as income to the employee.Do not treat per diem allowances as salary alternatives: Do not give the employee the choice of accepting a higher wage with no per diem or lower wage with a higher per diem.Consider the employee’s “tax home”: Per diem expenses are only allowed when the employee is traveling away from their tax home and for less than one year.Things you should think about when implementing an accountable plan: Maintain accurate records: No receipts required, but the employee must maintain a log which records days worked away from home, the location of the work, and the business purpose.Have a business purpose: Make sure the expenses are ordinary and necessary.The below requirements must be satisfied in order to have an accountable plan in the eyes of the Internal Revenue Service: Failure to properly administer a per diem plan that is intended to be qualified, will have adverse tax implications for both employees and the employer. The plan must be deemed a “qualified per diem plan” in order for the reimbursement payments to be considered tax-free. Merely implementing a per diem plan does not in and of itself make such payments tax-free to employees. The General Services Administration creates tables each year that reflect an amount per day that is generally thought to be sufficient to cover lodging, food, and incidental expenses in your travel location based on average market rates. Normal business expenses include items such as meals, lodging, and incidental expenses. They are used as a reimbursement of ordinary and normal business expenses incurred by the employees, while they are traveling for business away from home. Per diems are generally tax-free for the employees and deductible by the employer. However, are you aware of the Internal Revenue Service requirements for reporting billable per diems on customer invoices? It can be a useful tool when you have many employees traveling on business at once. Using the per diem allowance rule can help alleviate the recordkeeping for lodging, meals, and incidental expenses incurred by an employee while away from home overnight on business.
0 Comments
Leave a Reply. |