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    DrCawthon's Avatar
    DrCawthon Posts: 1, Reputation: 1
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    #1

    Dec 24, 2011, 07:57 AM
    Would Per Diem be taxable?
    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 situation at tax-time.

    They would basically be paying me $52/hour on W2 and $18/hour per diem (which is the gsa per diem allowance for the area divided by 8 hours per day). They also offered to pay me the straight $70 per hour on W2 but it seems on the surface the per diem would be the way to go if it will not be taxable.

    I plan to keep my current home here in Florida but get a rental house in South Florida for the duration of the job. They state it's a 6 month contract with possibility of extending. In my situation would this per diem be considered non-taxable or should I go straight W2? Any advise is greatly appreciated!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Dec 24, 2011, 08:21 AM
    The per diem is NOT taxable as long as the job is temporary in nature, and the IRS considers the job temporary as long as its duration is LESS than one year in length.
    Harry1018's Avatar
    Harry1018 Posts: 3, Reputation: 1
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    #3

    Nov 3, 2012, 09:37 AM
    Only if it is paid as per IRS allowance, and if the Employer has "Accountable Plan" on place. Meaning proper reports are submitted by the employee, and this plan is for all employees not selective. If these rules are not met then the total payment will become taxable, and off-course I year rule applies.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #4

    Nov 3, 2012, 04:56 PM
    Harry corrections are accurate. The IRS allowances are specified in IRS Pub 1542.
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