Have a Tax Question? Ask a Tax Expert
Hello JA Customer,
Per diem is an allowance paid to your employees for lodging, meals, and incidental expenses incurred when traveling. This allowance is in lieu of paying their actual travel expenses.
Per diem payments are not part of the employee's wages if the payment is equal to or less than the federal per diem rate and the employer receives an expense report from the employee.
The report must include:
The employee must file the expense report with the employer within a reasonable period of time (60 days). If any of these requirements are not met, the payment is taxable to the employee.
The above link is to a publication put out by the IRS which answers in more detail questions that you may have on paying your employees a per diem allowance, including the taxability of these payments.
Thank you JA Customer
Hello again Customer,
I know of no exception for truck drivers or anyone else to not have to submit the required reports. I will put your question back on the open board to see if someone else here is familiar with such an exception.
You will receive an email notification if someone else posts a response.
Thank you for your patience.
Your understanding is correct. As long as you pay them at or below the federal per diem rate, then you do not need to include the amount in their taxable wages, and therefore you pay no FICA taxes, unemployment or workers comp on the amount paid.
What you may be thinking of is a special rule which applies to transportation workers as far as the per diem rate which is used for meals and incidental expenses. Workers who are in the transportation industry may elect to use a special flat meals and incidental expense rate rather than having to apply rates on a locality basis. The flat rate which can be applied per day to cover meals and incidental expenses for a transportation worker is currently $65 per day. They must still submit a report to you which shows the date and place of the trip, business purpose of the trip, and receipts for lodging if that applies. Receipts for the meals are not required if using the per diem meal rates. So as long as you are paying them $65 per day or less, the log sheets is all that would be required.
Thank you Customer
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Thank you again Customer and have a good holiday weekend, or at least what's left of it.