The tax rules for substantiating business travel expenses are a hassle, but there’s a way that employers can reduce some of the strain.
Strategy: Use IRS-approved per diem rates. Your company can rely on this record-keeping shortcut for lodging and meals and incidental expenses (M&IE).
The IRS recently announced the new rates for the federal government’s 2017 fiscal year (FY2017) spanning Oct. 1, 2016, through Sept. 30, 2017. (IRS Notice 2016-58)
Here’s the whole story: Each year, the General Services Administration (GSA) sets the rates covering government employees in the 48 states in the continental U.S. and the District of Columbia (the “CONUS” rates); in areas outside the continental United States, including Hawaii, Puerto Rico and U.S. possessions (the “OCONUS” rates); and in foreign countries. The IRS promises that private employers may use these rates without fear of reprisal.
In addition to the standard rates for specific destinations, the GSA establishes rates for specified “high-cost” areas (see chart below).
For FY2017 the GSA is increasing the per diem rate for high-cost areas by $7, from $275 in the prior year to $282, consisting of $214 for lodging and $68 for M&IE. The per diem rate for all other areas (i.e., low-cost areas) increased by $4, from $185 to $189. This includes $132 for lodging and $57 for M&IE.
- Small Business Tax Deduction Strategies No matches