Your employer should change the policy. Right now, depending on how much you travel, you are being taxed on hundreds or thousands of dollars of income that, despite receipts, you cannot realistically offset in whole or part due to the 2% limit. According to the IRS: Per diem payments are not part of the employee's wages if the payment is equal to or less than the federal per diem rate and the employer receives an expense report from the employee (see <a rel="nofollow" target="_blank" href="
https://www.irs.gov/pub/irs-regs/perdiemfaq&a.prn.pdf">https://www.irs.gov/pub/irs-regs/perdiemfaq&a...>). Your employer should therefore (1) pay the federal per diem rate (which varies by location) instead of a flat rate and (2) require expense reports containing the purpose/date/place of the trip and receipted lodging expenses (see previously referenced pdf file), to be filed within 60 days. If these requirements are met, the employer can pay the employee the full allowable M&IE per diem and it will not be taxable and no 1099 is required to be generated. Then you can eat ramen and bank the rest of the per diem or spend it all, as you like.
