One tax advisor said that there is no way to use per diem deduction unless he would be doing Schedule C. For tax years 2018 to 2025 ( or until the laws change again) employees cannot deduct these on the Sch A any longer. Only the self employed filing a sch C can take a deduction.
Other source says that you can add per-diem on W2 (not clear if that requires to actually pay it to the employee with the wage). Adding it to the wages is an option.
1. In which case one can deduct per diem other than using Schedule C. No they cannot.
2. Is there a way to deduct per diem by paying it with the payroll? On the S-corp it will absorb the deduction because it will be paid thru reimbursing the employee. The per-diem allowance method can’t be used to substantiate business travel expenses incurred by a person who owns more than 10 percent of an S corporation. So, if that’s your situation, no dice. Instead, you must turn in proof of your actual travel expenses to the corporation. You can then receive tax-free reimbursements from the company.
3. If he will be deducting actual meal expenses as company expenses, he deducts 80% as per the IRS "hours of service" rule or 100%? Nothing is deducted on the personal return at any percentage.
I think you need to do some reading on accountable vs nonaccountable plans and how this is handled by the employer and employee ...
https://www.irs.gov/pub/irs-pdf/p463.pdf
