Wayfarer
Aug 31, 2009, 05:29 PM
First off I'll include some background info, so sorry for the length...
So I've been working at a site for about a year and a half now as a contract employee, and have been getting per diem to cover living expenses as a separate line item on my paycheck. (This is my first contract gig; no prior experience with per diem.) This is paid by my employer, is under the GSA max per diem rate for the county I'm working in, and was/is not reported on my W-2 as income. I originally expected to only be here as needed until the company staffed up with regulars but worked here for a year on the first contract, then was renewed for the position with a different contract by a different company, and so I've continued to receive a per diem allowance as a separate line item with no taxes withheld. I submit timecards to prove my hours, days, and location of work but I don't submit any expense reports. I do own a house in another state that I consider my permanent residence and visit a few times a year, and I incur duplicate living expenses (utility/maintenance costs) at the house.
Just recently I've been looking deeper into some per diem stuff and I keep coming across vague language about per diem requirements. Being now more confused and concerned than I was before, I hope to get some questions answered:
1) If my employer is NOT withholding payroll taxes on my per diem, does the employer therefore have an accountable program? Or do I have to treat the allowance as unaccountable, taxable income even though it isn't reported on my W-2?
2) If it's an accountable program, can I keep going as I am now or do I have to start itemizing, submitting expense reports, etc. Do I have to itemize my living expenses on my taxes? If so, any idea why the employer wouldn't be requiring this up front as proof/verification of the per diem payments? Literature I've read on this is vague as to what exactly is required if the per diem is paid as a regular allowance and is below the GSA maximum.
3) If I don't leave the area after a year but start a new but different temporary contract with a different company, should my new employer have started withholding taxes from the per diem allowance? My new employer was aware that I'd been working here for a year already.
4) What is some helpful info I need to get from my employer to help get to the bottom of all this?
For me the bottom line is, if I'm supposed to pay (and should have been paying) income taxes on per diem that has not been reported or withheld then I could owe a whole lot of money in back taxes and I need to start dealing with that, and I also need to see how/why my employer is not withholding those taxes as they ought to be. If not, and the status quo for my per diem allowance is okay, then I need to put my mind at ease!
Thanks!
So I've been working at a site for about a year and a half now as a contract employee, and have been getting per diem to cover living expenses as a separate line item on my paycheck. (This is my first contract gig; no prior experience with per diem.) This is paid by my employer, is under the GSA max per diem rate for the county I'm working in, and was/is not reported on my W-2 as income. I originally expected to only be here as needed until the company staffed up with regulars but worked here for a year on the first contract, then was renewed for the position with a different contract by a different company, and so I've continued to receive a per diem allowance as a separate line item with no taxes withheld. I submit timecards to prove my hours, days, and location of work but I don't submit any expense reports. I do own a house in another state that I consider my permanent residence and visit a few times a year, and I incur duplicate living expenses (utility/maintenance costs) at the house.
Just recently I've been looking deeper into some per diem stuff and I keep coming across vague language about per diem requirements. Being now more confused and concerned than I was before, I hope to get some questions answered:
1) If my employer is NOT withholding payroll taxes on my per diem, does the employer therefore have an accountable program? Or do I have to treat the allowance as unaccountable, taxable income even though it isn't reported on my W-2?
2) If it's an accountable program, can I keep going as I am now or do I have to start itemizing, submitting expense reports, etc. Do I have to itemize my living expenses on my taxes? If so, any idea why the employer wouldn't be requiring this up front as proof/verification of the per diem payments? Literature I've read on this is vague as to what exactly is required if the per diem is paid as a regular allowance and is below the GSA maximum.
3) If I don't leave the area after a year but start a new but different temporary contract with a different company, should my new employer have started withholding taxes from the per diem allowance? My new employer was aware that I'd been working here for a year already.
4) What is some helpful info I need to get from my employer to help get to the bottom of all this?
For me the bottom line is, if I'm supposed to pay (and should have been paying) income taxes on per diem that has not been reported or withheld then I could owe a whole lot of money in back taxes and I need to start dealing with that, and I also need to see how/why my employer is not withholding those taxes as they ought to be. If not, and the status quo for my per diem allowance is okay, then I need to put my mind at ease!
Thanks!