PER DIEM RATES FOR OCTOBER 2017 – SEPTEMBER 2018 ANNOUNCED

The General Services Administration has released the fiscal year (FY) 2018 travel per diem rates, which will take effect on October 1, 2017.

 

To find specific CONUS per diem rates go here.

 

The GSA establishes the per diem rates meals and incidental expenses and lodging each year for the fiscal period October through September.  These rates are “based on Average Daily Rate (ADR) data from the lodging industry, which GSA obtains through a contract with a leading provider of lodging industry data”.  

 

The new maximum standard per diem rate for travel locations not specifically identified in the per diem rate tables will increase from $142 to $144 ($93 for lodging, $51 for M&IE).   Fiscal 2018 meals and incidental per diems remain at the fiscal 2017 standard range of $51 to $74. 

 

A refresher course –

 

The GSA per diem rates can be used by employers to reimburse employees for business travel, and the per diems for meals and incidental expenses can be used by unreimbursed employees and the self-employed to claim a tax deduction for business travel.

 

Self-employed taxpayers filing a Schedule C, and employees who are not covered by an employer reimbursement plan, cannot use the per diem method that includes lodging. To claim a deduction for lodging expenses these taxpayers must substantiate the actual cost.  And corporations cannot use the per diem that includes lodging for owner-employees with more than 10% ownership, based on direct or indirect ownership.

 

Similar to how the Standard Mileage Allowance works for business use of your automobile, you can elect to deduct either the actual amount of your out of pocket expenses for meals and “incidental” expenses while away from home on business, or claim the appropriate federal per diem allowance determined by the location of the trip.  If you claim the per diem allowance you do not have to save receipts for actual expenses.

 

The per diem rates are based on the city where you “lay your head” at night. If your business meetings are in New York City, but you stay overnight at a hotel in New Jersey to get a lower room rate, you would use the New Jersey location to determine the appropriate per diem amount.

 

You can decide whether to deduct the GSA meals and incidental per diem rate or actual expenses on a trip by trip basis, but you must use the same method for all days within any single business trip. I can use the actual expenses for my trip to Washington DC last week to attend the NATP National Conference and the per diem rate for my upcoming September trip to Atlantic City for the NATP Forum.

 

The per diem rate for meals and incidental expenses includes tips given to porters, baggage carriers, bellhops, hotel maids (the “incidental” expenses) – so the actual out of pocket for these incidentals are not deductible if you claim the per diem.

 

There is also a separate per diem rate for incidental expenses only, to use if you do not incur meal experiences while traveling.  It is currently $5.00 per day.

 

On the first and last day of a business trip you claim 75% of the per diem amount, unless you can show you leave before breakfast on the first day and return after dinner on the last.

 

Any questions?

 

TTFN

 

 

 

 

 

 

 

 

GSA ANNOUNCES NEW PER DIEM RATES

The General Services Administration has released the fiscal year (FY) 2017 travel per diem rates, which will take effect on October 1, 2016.

To find specific CONUS per diem rates go here.

The GSA explains -

“GSA establishes the per diem rates for the lower 48 Continental United States (CONUS), which are the maximum allowances that federal employees are reimbursed for expenses incurred while on official travel.

The CONUS per diem rate for an area is actually three allowances: the lodging allowance, the meals allowance and the incidental expense allowance. Most of the CONUS (approximately 2600 counties) are covered by the standard CONUS per diem rate of $142 ($91 lodging, $51 meals and incidental expenses). In fiscal year (FY) 2017, there are about 350 Non-Standard Areas (NSAs) that have per diem rates higher than the standard CONUS rate.

Since FY 2005, NSA rates have been based on Average Daily Rate (ADR) data from the lodging industry, which GSA obtains through a contract with a leading provider of lodging industry data. For more about how per diem rates are determined, visit Factors Influencing Lodging Rates. The ADR is a widely accepted lodging-industry measure based upon a property's room rental revenue divided by the number of rooms rented as reported by the hotel property to the contractor. This calculation provides GSA with the average rate in a given area.”

The GSA per diem rates can be used by employers to reimburse employees for business travel, and the per diems for meals and incidental expenses can be used by unreimbursed employees and the self-employed to claim a tax deduction for business travel.

Self-employed taxpayers filing a Schedule C, and employees who are not covered by an employer reimbursement plan, cannot use the per diem method that includes lodging. To claim a deduction for lodging expenses these taxpayers must substantiate the actual cost.  And corporations cannot use the per diem that includes lodging for owner-employees with more than 10% ownership, based on direct or indirect ownership. 

Similar to how the Standard Mileage Allowance works for business use of your automobile, you can elect to deduct either the actual amount of your out of pocket expenses for meals and “incidental” expenses while away from home on business, or claim the appropriate federal per diem allowance determined by the location of the trip.  If you claim the per diem allowance you do not have to save receipts for actual expenses.

The per diem rates are based on the city where you “lay your head” at night. If your business meetings are in New York City, but you stay overnight at a hotel in New Jersey to get a lower room rate, you would use the New Jersey location to determine the appropriate per diem amount.

You can decide whether to deduct the GSA meals and incidental per diem rate or actual expenses on a trip by trip basis, but you must use the same method for all days within any single business trip. You can use the actual expenses when attending a conference in New York City in May and the per diem rate for an August convention in Las Vegas.

The per diem rate for meals and incidental expenses includes tips given to porters, baggage carriers, bellhops, hotel maids (the “incidental” expenses) – so the actual out of pocket for these incidentals are not deductible if you claim the per diem.

There is also a separate per diem rate for incidental expenses only, to use if you do not incur meal experiences while traveling.  It is currently $5.00 per day.

On the first and last day of a business trip you claim 75% of the per diem amount, unless you can show you leave before breakfast on the first day and return after dinner on the last.

TTFN

 

 

 

 

 

 

 

IRS UPDATES PER DIEM RATES FOR BUSINESS TRAVEL

The IRS recently released the annual update of the special per diem rates, effective October 1, 2015 to September 30, 2016, taxpayers can use to claim a tax deduction for lodging, meals, and incidental expenses when traveling away from home for business.

These per diems can be used by employers to reimburse employees for business travel, and the per diems for meals and incidental expenses can be used by unreimbursed employees and the self-employed to claim a tax deduction for business travel. 

Click here to find the per-diem rates for travel within the continental United States for any fiscal year

Under IRS Rev Proc 2007-63, self-employed taxpayers filing a Schedule C and employees who are not covered by an employer reimbursement plan cannot use the per diem method that includes lodging. To claim a deduction for lodging expenses these taxpayers must claim the actual cost.  And corporations cannot use the per diem that includes lodging for owner-employees with more than 10% ownership, based on direct or indirect ownership. 

Similar to how the Standard Mileage Allowance works for business use of your automobile, you can elect to deduct either the actual amount of your out of pocket expenses for meals and “incidental” expenses while away from home on business, or claim the appropriate federal per diem allowance determined by the location of the trip.  If you claim the per diem allowance you do not have to save receipts for actual expenses.

The per diem rates are based on the city where you “lay your head” at night. If your business meetings are in New York City, but you stay overnight at a hotel in New Jersey to get a lower room rate, you would use the New Jersey location to determine the appropriate per diem amount.

On the first and last day of a business trip you claim 75% of the per diem amount, unless you can show you leave before breakfast on the first day and return after dinner on the last.

You can decide whether to deduct the per diem rate or actual expenses on a trip by trip basis, but you must use the same method for all days within any single business trip. You can use the actual expenses when attending a conference in New York City in May and the per diem rate for an August convention in Las Vegas.

The per-diem rates for FY 2016 (10/1/15 – 9/30/16) are slightly lower than those for FY 2015 (10/1/14 – 9/30/15).  I did a check of the Meal and Incidental per-diems for Atlantic City NJ and Philadelphia PA.  The rate for these cities for FY 2015 was $66, but the rate for FY 2016 is $64.

Incidental expenses include fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. The per-diem rate for the incidental-expenses-only deduction for FY 2016 remains unchanged at $5 per day for any locality of travel.

The special meals and incidental expenses per-diem for transportation workers for FY 2016 is $63 for any locality of travel in the continental United States and $68 for any locality of travel outside the continental United States.  These are up from the FY 2015 rates of $59 and $65.  A transportation worker is an employee or self-employed taxpayer whose work directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and requires the taxpayer to travel away from home to areas with different federal per-diem rates during a single trip.

Of course only 50% of the per-diem for meals and incidental expenses are deductible.  Taxpayers subject to the Department of Transportation hours of service rules can deduct 80%.

TTFN

FIREFIGHTER MEALS

Over the years I have done 1040s for many, many police officers, fire fighters, and other municipal service employees. I am often asked about the meal deduction for fire fighters.
.
Here is the word (with documentation) –
.
It is common in fire stations throughout the US for firefighters to operate a “common mess” because of the long shifts routinely worked by firefighters and the requirement that the firefighters remain in the station house unless called away on official business. Under a common mess arrangement, the firefighters contribute to a fund from which the food for their meals is purchased.
.
Payments to an organized mess that are required of a fireman by his immediate superiors at the fire station, regardless of whether he leaves his assigned duty station during the normal 24-hour shift and actually participates in the mess, are expenses that are directly and proximately related to the active conduct of the fireman’s trade or business and are deductible under IRC Section 162(a). [Robert E. Cooper, 67 T.C. 870, Nonacq.,1978–1 C.B. 2; Richard R. Sibla, 68 T.C. 422, Nonacq., 1978-1 C.B. 3.]
.
The key point here is that the payments must be required as a condition of employment. In T.C. Summary Opinion 2004-63 the court upheld that if the firefighters’ payments into a common meal fund are voluntary (not a condition of employment), the expenses constitute personal expenses and are not deductible.
.
As with any other employee business expense the deduction is first reported on Form 2106 (or Form 2106-EZ) and carried over to Schedule A as a miscellaneous deduction subject to the 2% of AGI exclusion.
.
And as is the case with any meals claimed as an employee business expense you only get a tax benefit (tax deduction) for 50% of the total meals.
.
We are talking about a potentially sizeable deduction here. Let us say that there are ninety (90) 24-hour shifts in a year and each fire fighter is required to contribute $20.00 per shift to the common mess fund. That is a total of $1,800 – or a tax deduction of $900. Added to other required employee business expenses of fire fighters, such as uniform cost and maintenance, equipment purchases, union dues, education for advancement, etc, it is not difficult exceed 2% of AGI.
.
If you are a firefighter and you participate in a common mess check to see if your payments are “voluntary” or “required”. If they are indeed “voluntary” check with your union and see what can be done to make the payments “required” so they will be legitimately deductible.
.
TTFN