Keeping detailed records of employee travel expenses is a hassle. But there’s a way you can simplify matters for your small business without any tax downside.
Strategy: Have your private company use the IRS-approved “per diem rates” for federal government employees. This way, employees don’t have to account for every cup of coffee or cab ride.
If your company uses the per diem rates, it can deduct the full amount reimbursements to employees. Exception: The 50% deduction limit on meal expenses still applies.
Actually, you have a choice between two per diem rates. The first is based on the specific travel destination of the employee. The General Services Administration (GSA) sets the following each year:
- The per diem rates for the 48 states in the contiguous United States and the District of Columbia (the “CONUS” rates)
- The per diem rates for areas outside the contiguous United States such as Alaska, Ha...(register to read more)