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    GreenDonkey's Avatar
    GreenDonkey Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Mar 20, 2008, 12:00 PM
    Perdiems in same state
    Hello

    I have an S-Corp (incorporated in CA), hired a consultant (on H1B status, CA resident).

    If I place him within California, can I pay him Perdiems? I guess avg rate is $129
    To pay perdiems, how far the client location should be from his home?
    Should I show that as non-taxable item on payroll?
    If IRS audits, what kind of proof they look for?

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

    May 2, 2008, 11:23 AM
    The general rule is 50 miles distance between home and work site in order to qualify for per diem.

    If you pay per diem without some type of expense report, the per diem is taxable income because it is part of a NON-accountable plan.

    If you require an expense report and reimurse ONLY for allowable expenses, then the reimbursement is NOT taxable.
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