Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

Is per diem taxable after a year? How to be tax free on my per diem?

Customer Question
My company pays me per...
My company pays me per diem which is not taxable. However, starting this July, will be my 11th month in the same location for my project. I was informed by my employer that going forward I will see my per diem being taxed. I have the following questions about this:

1. Is there a way to get around this situation so that my per diem is not taxed? My employer briefly mentioned something about possibility of moving to another office location for a month and then relocating back to my current office location in order to maintain the tax free status of my per diem. Is this true? If yes, how exactly does this work?

2. When my per diem becomes taxable, will I have to pay tax on any per diem that I receive going forward OR will I have to also pay tax on tax-free per diem which I have already received in this year?

Thank you for your help.
Submitted: 8 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 7 minutes by:
6/22/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Verified

Your per diem is only non-taxable when the assignment you are on is expected to last less than one year. Once you find out that your assignment will last beyond that point, then the per diem amounts are subject to tax. Amounts you have been paid up to this point will continue to be non-taxable.

As far as moving to another location for a month, you may get away with it as far as how your employer handles the taxability of these payments, but if you are ever audited by the IRS, they would likely end up disallowing you to claim this as non-taxable income.

There is nothing written in stone about this issue, and the same question comes up from a number of people who pass through this forum, who are trying to accomplish the same thing as you are.

But the IRS is well aware of this. They would likely take the position that this move was made in an effort to circumvent the rules, and say that you were made aware this position would no longer be less than one year. It just depends on if you are willing to risk having this surface in the event of an audit.

Ask Your Own Tax Question
Customer reply replied 8 years ago

Thanks for your reply. A few more questions:

1. Does the per diem become taxable after 11 or 12 months?

2. If I do decide to go ahead with the relocation plan, which address needs to be changed on paper? There are three addresses in question which is what is confusing me. Here's the situation: the first address is my home address on my Company's payroll record which is in PA. Naturally, state tax deducted is for PA on my pay stub. The second address is my temporary apt in WV (which is where my project is). It is to this WV address where my pay stubs get sent. The third address in question is the address of my work location. (Is this something that my company needs to provide to IRS?).

Logically, I think it is the third address that needs to be changed in order to maintain the tax free per diem. Technically, can this address can be changed only on paper (for a duration even longer than one month) but I can physically still work from my current location. What are your thoughts?

3. How far does the new location needs to be? 50 miles?

Tax Professional: Merlo, Accountant replied 8 years ago

The per diem becomes taxable as soon as you receive notification or become aware of the fact that the assignment will no longer last less than one year.

As far as your address, this information is not provided to the IRS. The only address the IRS ever sees is the one that you report on your tax return and the one that is used to send your W-2 form. So it will not make a difference whether you change that third address or not.

As far as the new location, there is no regulation which states how far the two jobs need to be apart in miles. The regulations state that the temporary work assignment must be at least 50 miles from your regular home. So wherever you relocate to, as long as you treat that as a separate job location and as long as it is still 50 miles from your regular home, then it qualifies for per diem reimbursement.

However, I would say this. The further away that you can make that new location from your current job site, the better chance you would have of this standing up to an audit. So I would say you would want to go at least 50 miles, since that is what the IRS uses for their guidelines as being away from home.

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Verified
Merlo and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Merlo Your Own Question
Merlo
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
9,783 Satisfied Customers
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad

Merlo is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
What is the substative regulation pursuant to assessment of
what is the substative regulation pursuant to assessment of income tax, published in the Federal register, according to 26 usc 6323 (1.6323) … read more
Nicholas Preusch
Nicholas Preusch
LLM
0 satisfied customers
If someone has obtained my tax return and w-2 without my
Good morning. If someone has obtained my tax return and w-2 without my permission as well as showing it to other people, is that legal? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,490 satisfied customers
Suppose my taxable income in 220,000 this year and the tax
Suppose my taxable income in 220,000 this year and the tax rate is X up to 200K, but Y for 200and over, do I pay Y on the full 220K or just that above 200K? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Does the IRS ever do an audit that results in refunding
Does the IRS ever do an audit that results in refunding money back to the taxpayer AND then taking back any social security credits that might have been earned in error? It's a long story, but I'm sel… read more
socrateaser
socrateaser
1,031 satisfied customers
Does the IRS ever do an audit that results in refunding
Does the IRS ever do an audit that results in refunding money back to the taxpayer AND then taking back any social security credits that might have been earned in error? It's a long story, but I'm sel… read more
Amanda Russell
Amanda Russell
Accounting Tax & Profit Strategist
Master\u0027s Degree
9 satisfied customers
For a ny state partnership tax return, if you file an
For a ny state partnership tax return, if you file an extension but don't pay anything and then end up owing a lot. Do they still recognize the extension or do they charge a failure to pay penalty (fo… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Is a tax return less likely to be audited if it's prepared
Is a tax return less likely to be audited if it's prepared by a CPA or simply a tax person? Secondly, our Rotary Club is a 401 C for we have a 401 c 3 Foundation the question is can individual members… read more
socrateaser
socrateaser
1,031 satisfied customers
I need somewone who is knowledagble with IRS Audit, GA, Yes
I need somewone who is knowledagble with IRS Audit … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I need help for W-2 forms for auto loan asap. File w-2's. I
i need help for W-2 forms for auto loan asap JA: The Expert will know how to help. Please tell me more, so we can help you best. Customer: file w-2's JA: Is there anything else important you think the… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,230 satisfied customers
My relative has an IRS Audit. Her accountant said that he"
My relative has an IRS Audit. Her accountant said that he " procured her tax return account transcripts, and the Wage and Income transcripts that the IRS has to verify your tax return disclosures." Do… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
What is the purpose of irs form 2297. by signing this form,
what is the purpose of irs form 2297. by signing this form , am i giving up my right to my past refund? … read more
abci168
abci168
Principal
27 satisfied customers
Attorney, my ny state tax return was audited. Finally it
Attorney , my ny state tax return was audited . Finally it says the case was closed and a letter will be mailed out . Anyone to access this info… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2 FROM HER EMPLOYER WITH A TYPO IN THE SOCIAL SECURITY NUMBER. TO DATE THE EMPLOYER HAS NOT PROVIDED A "CORRECTED" FORM W-2. IS THERE AN IRS "… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,230 satisfied customers
I need a copy both mine and my husbands w-2 form for the tax
I need a copy both mine and my husbands w-2 form for the tax year 2016.where can I get them … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,230 satisfied customers
Apparently, the IRS did an audit of my 2012 and 2013 taxes.
Apparently, the IRS did an audit of my 2012 and 2013 taxes. But I never received notice because they mailed the notice to an address to which I have not resided at since 2014. Now they have placed a l… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,490 satisfied customers
Rules on Rollovers (Return of a non-taxed IRA Distribution).
Rules on Rollovers (Return of a non-taxed IRA Distribution). Over 70-1/2 years old) … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I received two W-2 forms forms from DSHS - state for the
I received two W-2 forms forms from DSHS -Washington state for the care of my disabled son who lives in my home. but I should not be receiving these or having to claim this under irs notice 2014 diffi… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
What is the specific IRS rule, publication, or regulation
Hello, what is the specific IRS rule, publication, or regulation that says that a taxpayer must pay federal income taxes on lump sum back pay in the year it was received rather than the year it was ea… read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x