Take tax shortcut for business travel

The tax rules for substantiating business travel expenses are a major hassle, but there’s a way that employers can reduce some of the strain.

Strategy: Use the IRS-approved “per diem rates.” Your company can rely on this record-keeping shortcut for lodging, meals and incidental expenses (M&IE).

The IRS recently announced the new rates for the federal government’s 2019 fiscal year (FY2019) spanning Oct. 1, 2018 through Sept. 30, 2019. (IRS Notice 2018-77, 9/26/18)

Here’s the whole story: Each year, the Government Services Administration (GSA) sets the rates covering government employees. In addition to the standard rates for specific destinations, the GSA establishes rates for specified “high-cost” areas (see chart).

For FY2019, the GSA is increasing the per diem rate for high-cost areas by $3 from $284 to $287, consisting of $216 for lodging and $71 for M&IE. The per diem rate for all other areas (i.e., low-cost areas) is increased by $4, from $191 to $195. This includes $135 for lodging and $65 for M&IE.

Tip: You can’t use the per diem rates for lodging if you’re self-employed or you’re a 10%-or-more owner.

High-cost areas for FY2019