per deim taxable?

[WITAXLADY]

Workers paid extra $8 per hour non-taxable per diem for traveling and also given an apartment for the week to build ships. One moved within 60 miles - close to worksite and wonders if the per diem of $8 is now taxable?

Thx

[kcjenkins]

60 miles, does that mean he's no longer using the local housing provided?

Depending upon the type of plan the employer has, the reimbursement for business travel may or may not be taxable.

There are two types of plans:

• Accountable Plans - An accountable plan is not taxable to your employee. Amounts paid under an accountable plan are not wages and are not subject to income tax withholding and payment of social security, Medicare, and Federal Unemployment (FUTA) Taxes.
• Nonaccountable Plans - A nonaccountable plan is taxable to your employees and is subject to all employment taxes and withholding.

Accountable Plans - (Nontaxable to your employee) In order to qualify as an accountable plan, your reimbursement or allowance arrangement must require that your employees meet all three of the following rules:

There must be a business connection to the expenditure. This means that the expense must be a deductible business expense incurred in connection with services performed as an employee. If not reimbursed by the employer, the expense would be deductible by the employee on his/her 1040 income tax return.

There must be "adequate" accounting by the recipient within a reasonable period of time. This means that your employees must verify the date, time, place, amount and the business purpose of the expenses. Receipts are required unless the reimbursement is made under a per diem plan.

Excess reimbursements or advances must be returned within a reasonable period of time. Reasonable depends upon facts and circumstances.

Amounts paid under an accountable plan are not wages and are not subject to income tax withholding and payment of social security, Medicare, and Federal Unemployment (FUTA) taxes.

It sounds to me like he still meets the three tests, since that small amount is clearly for travel, and he still lives too far away for a reasonable commute. But if in fact he is commuting, then I think it becomes taxable.