New 2016-2017 special per-diem rates for travel

Your Guide to State, Local, Federal, Estate + International Taxation

per-diem rates, vacation, lap top, pool, taxes

Use of per-diem rates has been a long standing method of deducting business travel expenses for tax purposes to encompass amounts paid for lodging (excluding taxes), meals and incidental expenses. Rate tables are utilized that show daily expense rates and are used in place of the laborious task of keeping more detailed expense records of actual expenses. The General Services Administration (GSA) establishes per diem rates for destinations within the Continental United States (CONUS) and periodically those rates are updated. The State Department establishes the foreign rates (i.e. for business travel to Europe, etc.) while the Department of Defense (DOD) establishes non-foreign rates to destinations such as Alaska and Hawaii.

Per-diem rates are set, based in part, on local contractor provided average daily rate (ADR) data of local lodging properties. Accordingly, you may generally see higher than standard per-diem rates allowed for high cost cities such as San Francisco and New York. In situations where no lodging is involved, a standalone rate that encompasses only meals and incidentals can be used.

The incidental expenses portion of the per-diem rates encompasses only fees and tips given to porters, baggage carriers, hotel staff and staff on ships and is currently $5 a day. So the IRS apparently does not want you to be a big tipper at their expense. Hopefully the lodging portion of the rate allowed in your destination will pay for more than just a room at a lodging facility I once saw called the “It’ll do”. Current per-diem rates can be found here. Safe travels!

Dale F. Jensen, CPA