Do you have employees travel for your business? Are you aware of the rates of reimbursement allowed? On October 5 the IRS released the 2015-2016 per diem rates for taxpayers to use to substantiate the amount of ordinary and necessary business expenses incurred while traveling away from home. These rates include:
- Special Transportation Industry Meal & Incidental expenses (M&IE)
- The rate for incidental expenses only deduction, and
- Rates and list of high-cost localities for purposes of the high-low substantiation
This reimbursement rate allows you to pay an employee the rate determined by the IRS as reasonable rather than having to use receipts for actual expenses to determine the amount owed.
The special M&IE rates for taxpayers in the transportation industry are $63 for any locality of travel in the continental United States (CONUS) and $68 for any locality of travel outside the continental United States (OCONUS). The rate for any CONUS or OCONUS locality of travel for the incidental expenses only deduction is $5 per day.
For purposes of the high-low substantiation method, the per diem rates are $275 for travel to any high-cost locality and $185 for travel to any other locality within CONUS, which includes the meal reimbursement. There are numerous high cost locations which can be viewed here. This lists the cities and dates where the high cost reimbursement rate is in effect.
Although all employers can use these new per diem rates there are some limitations. Employees owning more than 10% of the company or self-employed individuals are not subject to these rates. Rather, all records normally required for business travel must be kept.
These new rates are effective as of October 1, 2015.