IRS Sets New Per Diem Rates

[kcjenkins]

Notice 2013-65 announces the special per diem rates, effective Oct. 1, 2013, which taxpayers may use in the year ahead to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home. The annually announced rates are the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method.

Rev. Proc. 2011-47 provides the rules for using per diem rates, rather than actual expenses, to substantiate the amount of expenses for lodging, meals, and incidental expenses for travel away from home. Taxpayers who may use per diem rates to substantiate the amount of travel expenses under Rev. Proc. 2011-47 may use the federal per diem rates published annually by the General Services Administration, the IRS pointed out. Rev. Proc. 2011-47 allows certain taxpayers to use a special transportation industry rate or rates under a high-low substantiation method for certain high-cost localities.

[mcb39]

Thanks KC..........

[Mr. Pencil]

Thanks, KC. Note that these are only for employee reimbursement under an accountable plan, not Schedule C. They only cover cost; you still must substantiate time, place, and business purpose. They are effective October 1 and can be used for the last 3 months of 2013 with certain limitations. It is a substantial increase, so worth considering.

The reason we still need the 2011 Rev Proc is that it doesn't get updated every year. The new rates are published in an annual notice, which I guess is a simpler thing for the IRS rule-makers. But I do see one important change in Section 2. Local taxicab is no longer included in incidental expenses. From now on it can be deducted or reimbursed in addition to the per diem rate.

Finally, I'm proud to report that my own home town has made it onto the list of high-cost localities.

[Guest Taxed]

I wonder what percentage of businesses use per diem rates for accountable plans instead of actual expenses?

I know Govt and transportation industry uses them.