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Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2385
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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When using the IRS gh/Low rule diem and offering a lessor

Customer Question

When using the IRS High/Low rule for per diem and offering a lessor amount to our employees, what percentage should I use to determine the M&IE portion. I was going to use 30%.
Submitted: 12 months ago.
Category: Tax
Expert:  Anne replied 12 months ago.

Hi

I'm Anne. I've been preparing taxes for 27 years and I'll be happy to help you.

In pub 463, (https://www.irs.gov/pub/irs-pdf/p463.pdf) on page 34, it gives you the exact $ amount for the M&IE. If you are only going to use the lower rate, then that rate is $57 for M&IE.

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Customer: replied 12 months ago.
Am I required to use that amount, for the meals portion. It seems excessive. We want to give them $150 a day for both lodging and meals. But, we want to pay them just 75% of the meal portion on the first and last day of their trip.
Customer: replied 12 months ago.
If we use $57 for meals they are only getting $93 for lodging, it seems "off-balance".
Expert:  Anne replied 12 months ago.

You obviously have what is referred to as a "non accountable" plan, (which means you reimburse the employee without seeing their receipts,) and as long as you include the reimbursements as taxable income on their W2, then there shouldn't be a problem with how much you reimburse.

Please see below:

http://www.tax.gov/TaxabilityCertainFringeBenefits/pdf/Accountable_v_Nonaccountable_Plans_Methods_of_Reimbursing_Employees_for_Expense.pdf

Again,

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