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Use the easy way to write off business-travel expenses

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in Small Business Tax

Uncle Sam often examines deductible travel expenses through a magnifying glass. So, both employers and employees must meet strict record-keeping requirements or face the consequences. Of course, that can turn into a major hassle.

Fortunately, you’re allowed to take a tax shortcut with full IRS blessing.

Strategy: Use the IRS-approved per-diem rate allowances for employee business trips in lieu of accounting for every donut and baggage-handling tip. The per-diem reimbursements are tax-free to employees up to the prescribed limits.

What’s more, your company can deduct the reimbursements in full. One exception: The 50% deduction limit on meal expenses still applies.

What are the new rates?

The IRS just announced per-diem rates for the coming year. (IRS revenue procedure 2006-41)

Good news: The approved per-diem rate for highcost areas increases to $246 ($188 for lodging plus $58 for meals and incidental expenses). That represents a s...(register to read more)

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