Per Diem

2923701 · January 2009

We have an employee that has been assigned to a different state for the next 2 months. During his stay in that state, he will be doing alot of traveling. How is his per diem rate calculated? Is there a flat rate that can be used?

NaeNae55 · January 2009

You can use a flat rate (per diem) if you choose, and the rate can be one you choose based on your business needs, or use those suggested by the IRS. Your deductions and the employee's taxes will be much easier if you use the IRS rates so I highly recommend that you stick with those.

The IRS uses different rates for different parts of the country, and for different cities. To find these rates, go to IRS.gov and enter 'per diem' in the search box. A list of publications will come up. You can choose the one that works best for you.

Good luck!

Nae

2923701 · January 2009

I located the various rates. The problem is that he is traveling to different cities within the state. Different cities have different rates. So what rate do we use for their per diem? Can we use the city he is based in? The other cities are either higher or lower rates.

NaeNae55 · January 2009

The IRS will only let you deduct the amounts it lists per each city. So, for instance, if you set a rate of $20 per day and one city is (per the IRS) $18 per day, you will have to report $2 in extra income for this employee every time he goes to that city. If the per diem is $22, you will pay him $20 (and claim a $20 deduction) and he will have to claim $2 extra expenses on his taxes.

I know it is a pain to check each city's rates before the employee goes there, but it is much more of a pain to figure out his W2 if you don't. Just keep a register of where he is going and give him a copy of the publication. That way he will know his per diem each day, and so will you.

Good luck!

Nae

Per Diem

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