Ask Experts Questions for FREE Help !
Ask
    DRJRD's Avatar
    DRJRD Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Oct 17, 2012, 06:48 PM
    Unused Per Diem from Federal Government Taxable?
    I am a federal government employee. When we go on business trips overseas, the government pays us in advance per diem (for lodging, meals, and incidentals) at the standard government rates. However, frequently we are able to find cheaper options and do not spend all of the per diem. While the finance office conducts a close-out meeting with us after the trips to make sure that all of the our expenses were filed, they never ask if we use all of the per diem. The standard practice is to just pocket the unused per diem and, from everyone I talk to, to not report it on taxes. But this doesn't seem right to me. It seems like I should have to report the unused per diem as income somewhere on my federal and state tax returns. I have searched for guidance on this issue online to no avail. Can you provide some insight and direction on this matter?

    Thanks!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Oct 18, 2012, 06:40 AM
    Per diem payments for business trips are different than per diem payments for temporary work locations. Travel per diem is adjusted each year by the GSA to reflect average costs, and there will be times your costs will not meet that average.

    Due to cost-benefit analysis, the IRS has determined it is not worth their effort to try to tax instances where per diem exceeds the actual expense incurred.
    DRJRD's Avatar
    DRJRD Posts: 3, Reputation: 1
    New Member
    		  
    #3

    Oct 18, 2012, 03:43 PM
    So, in short, the IRS does not tax unused per diem as long as the amount of per diem received did not exceed the federal rates?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Oct 18, 2012, 04:09 PM
    Yes, that is correct. The IRS uses the federal rates as the guide to determine taxability.
    DRJRD's Avatar
    DRJRD Posts: 3, Reputation: 1
    New Member
    		  
    #5

    Oct 18, 2012, 05:31 PM
    Quote Originally Posted by AtlantaTaxExpert View Post
    Yes, that is correct. The IRS uses the federal rates as the guide to determine taxability.
    Thank you very much for your helpful insight. I just wanted to make sure I was reporting all my income properly. Thanks again!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #6

    Oct 19, 2012, 06:10 AM
    Glad to help.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Would Per Diem be taxable? [ 3 Answers ]

I am considering taking an IT consulting job. This job would be in Florida and I do have a home in Florida but the new assignment is about 550 miles away. The company hiring me told I could get per diem (and some contractor friends recommended it) but I'm not sure if it would be taxable in my...

Is per diem taxable? [ 18 Answers ]

Can someone please tell me if per diem is taxable? My brother took a job this past year and half his salary is per diem, as he travels daily. He receives a monthly expense allotment for which he submits receipts. His per diem is for meals and accommodations only. Of course, he has asked me to...

When does Per Diem become taxable? [ 3 Answers ]

When does Per Diem become taxable to a contractor? I have told it is after one year but I cannot find anywhere on the IRS web-site or in any publications.

Is Per Diem Taxable? [ 2 Answers ]

I am a contract worker who has worked and lived out of state for just over a year. I have received a per diem of 2/3's of hourly pay rate for my out of state living expenses. The W-2 that I received only reports the 1/3 that was taxed. I am responsible to pay federal tax on the per diem?

Is the Federal Per Diem for meals 50%, 80% or 100% Non Taxable for 1099 employees [ 3 Answers ]

Contract employees receive a 1099 that does not have separate boxes for pay and federal per diem. Business meals are generally allowed at 50% . The per diem is different and may be 100% allowed for contract employees out of town for under one yr. I can not find a clear answer in the IRS...

View more questions Search