per diem

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Per diem is Latin for "per day" or "for each day". It usually refers to the daily rate of any kind of payment. It may also refer to a specific amount of money that an organization allows an individual to spend per day, to cover living and traveling expenses in connection with work. It is the allowance given to the employee/worker for completing a task or going on tour away from home.

United States of America

U.S. companies and organizations use the per diem rate guide published by the General Services Administration, which provides rates for a number of cities in the United States. When an employer reports an employee's earning at the end of the year on a W-2, per diem is listed separate from taxable income, under 'Misc. non-taxable'.

Per diem is understood to include the additional expenses incurred living away from home—basically having two residences. The IRS sets the maximum amount of per diem each year based on the location—for instance, New York City has a higher rate than Gadsden, Alabama.

To qualify for per diem, your work-related business activity should be at least fifty miles from your tax home, and require an overnight stay. The IRS code does not specify a number of miles. However, based on IRS rulings, it is commonly accepted that a distance of 50 miles as a reasonable distance to justify payment of per diem allowance.

If the taxpayer anticipates employment away from home to last less than 1 year, then all the facts and circumstances are considered to determine whether such employment is "temporary". If the taxpayer anticipates employment to last (and it does in fact last) between 1 and 2 years, the I.R.S. presumes that the employment is "indefinite". The taxpayer may rebut the presumption by demonstrating certain objective factors set forth in the revenue ruling. For employment with an anticipated or actual stay of 2 years or more, the I.R.S. holds that such employment is "indefinite", regardless of any other facts or circumstances.

Any tour of duty adding up to over 500 miles counts as a per diem. You can claim up to the per diem limit without receipts. Anything over this has to have records. Note also that as long as you keep a record of the amount spent and the date of the expense, then you do NOT need a receipt for any expense less than $75. A logbook and a pocket calendar is a perfectly acceptable method of tracking these "undocumented" (with a receipt, at least) expenses.

The US military pays its members per diem in accordance with the Joint Federal Travel Regulations. According to these regulations, the first and last days of travel are paid 75% of the daily General Services Administration rate, while all other days of travel receive the full rate. The JFTR also follows the 'expenses below $75 do not require a receipt' rule, although local disbursing officers may question charges they feel may be false.

The US Government also allows federal travelers to purchase a home at the temporary duty location and claim the allowable expenses of: mortgage interest, property taxes and utility costs actually incurred.^[1]

Per diem is also used in contracts to specify penalty accruals. Such verbiage would be found in reference to the expected closing date for a Real Estate contract, typically compensating a seller for a buyers lack of expedience.

Per Diem Committee

The Per Diem Committee[1] establishes per diem rates for overseas US areas.; e.g., Alaska, Hawai'i, Guam, and other Non-Foreign Locations - and also provides world-wide per diem rates (from GSA for CONUS and from State Department for foreign countries).

See also

• Attendance allowance
• Business Mileage Reimbursement Rate (USA)

References

1. ^ http://usmilitary.about.com/od/travelpay/a/travel.-fT9.htm

External links

• GSA - Domestic Per Diem Rates
• USA.gov - Search Domestic and Foreign Per Diem Rates
• IRS Publication 463 (2006), Travel, Entertainment, Gift, and Car Expenses
• [2]

Department of Defense Per Diem Travel and Transportation Allowance Committee - U.S. Government

• [3]