Some accurate information, some inaccurate... must be a message board. Anyhow, here goes nothing...
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Originally Posted by Rev.Vassago
Actually, the opposite is usually true. Most companies will give the full $52 per day as untaxed per diem. Where you run into a problem is at the end of the year, only 75% of that is allowed to be deducted on your taxes, which means you underpaid 25% of your taxes on that $52 per day.
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False. According to the IRS: (50% is 75% for us, but the same rules apply)
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Originally Posted by Publication 463
Generally, business-related meal and entertainment expenses are subject to the 50% limit. Figure A can help you determine if the 50% limit applies to you.
Expenses not subject to 50% limit. Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions.
1 - Employee's reimbursed expenses. If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Accountable plans are discussed in chapter 6.
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Originally Posted by Copperhead
Regarding #3, Figuring tax return per diem. The present per diem is $52 per day. You total ALL days out and multply by $52 and that is your perdiem for the year. Then take 75% of that and that is the actual dollar amount you can deduct. (80% for 2008)
NOW...... If your company is paying "per diem", generally, they will not pay enough to cover the $52 a day allowance. Therefore, you can figure up what per diem would be at the standard daily rate and then subtract what your company paid and you can deduct the rest off your tax return.
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True.
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Originally Posted by Publication 463
Allowance less than or equal to the federal rate. If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance.
However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount.
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Originally Posted by Copperhead
It doesn't matter if they pay $70 a day per diem..... you do not have to pay any taxes to make up anything!!!!! The IRS may come down on the carrier, but you are not obligated for ANY make up tax on per diem.
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This part is a little dicier. In practice, I agree 100%. Their target would be the employer, rather than the employee. By the law though, the employee is on the hook for unpaid taxes. Whether or not anyone comes collecting, well you know how that goes.
I've linked a pdf from the IRS ruling below. It addresses this exact issue, going as far as using a trucking company in the example.
A little light reading for you guys tonight.
If you receive per diem payments (considered reimbursements which is why they are not taxable) in excess of the $52 daily limit, you are obligated to repay the excess to your employer. In the absence of a system by which you repay the excess, your employer is required to treat the excess as wages. If a pattern of abuse (explained in the linked pdf) is established, you are on the hook for the entire amount as wages, not just the excess.
As Copperhead suggests, they would likely come after the employer. That being said, I have a friend who drove a cab. While not under this exact rule, a similar issue came up regarding untaxed wages vs. expenses. The cab company got hit hard, but the drivers had to pay back taxes on all of the untaxed income. That's 'dollar one' taxes, as in SSI, income tax, the whole kit and kaboodle. Just something to keep in mind.
