I work in construction and have been really confused by the tax codes for per diems. I receive a daily rate of $70 a day for per diems. This is to cover everything from living to what ever else I need to live in what ever city the job is in. My question is I have never been taxed for per diems until the present job I am on. The employer is trying to say that since I will be at this job over a year that the per diem is now taxable. Does anyone know if this is correct?

Yes, the company IS correct.

The IRS defines temporary as being UNDER one year, and they allow you to deduct daily living costs on such jobs.

If you get per diem for a job under a year, it is NOT taxable because it reimburses you for those daily deductible costs, thus making claiming those deductions a moot point.

However, once the job exceeds a year, it is no longer temporary in the IRS' eyes, so the per diem reimbursement no longer offets deductible expenses. Under this logic, the per diem then becomes taxable income.