Do we pay taxes on pre dem ?

Forum|Forum|6 months ago
January 9, 2026
2 replies
28 views

Working in oilfield and pre dem is offered, do we pay taxes on that pre dem?

TurboTax Online

Best answer by Opus 17

If you are a W-2 worker, then:

Your employer can provide tax-free assistance for food and lodging for temporary assignments. This is discussed in publication 463.

https://www.irs.gov/forms-pubs/about-publication-463

A temporary assignment is one that is expected to last, and actually does last, 1 year or less. If the assignment has no definite end date, or lasts more than one year, it is considered indefinite and not considered temporary. And, if circumstances change and a temporary assignment changes to being indefinite, then the food and lodging assistance is no longer tax free. For example, if you are assigned to work in the field for 9 months, and at month 7 they ask you to stay another 8 months, it is no longer "temporary" because the expectation has changed, even though you haven;t been there a year yet.

If the assignment is temporary, the company can provide you food and lodging assistance up to your actual costs (if you prove them with receipts) or up to the federal per diem rate (which varies depending on location) on a tax-free basis. If the assignment is not considered temporary according to the rules, then the per diem or reimbursement must be included in your taxable income on your W-2 and is subject to income tax and social security and medicare tax withholding.

M

mesquitebean

Level 15

I see your question has not been addressed. Hopefully, someone familiar with that subject will respond soon. In the meantime, are you working as an employee (W-2) or an independent contractor (1099)?

O

Opus 17

Answer

Level 15

If you are a W-2 worker, then:

Your employer can provide tax-free assistance for food and lodging for temporary assignments. This is discussed in publication 463.

https://www.irs.gov/forms-pubs/about-publication-463

A temporary assignment is one that is expected to last, and actually does last, 1 year or less. If the assignment has no definite end date, or lasts more than one year, it is considered indefinite and not considered temporary. And, if circumstances change and a temporary assignment changes to being indefinite, then the food and lodging assistance is no longer tax free. For example, if you are assigned to work in the field for 9 months, and at month 7 they ask you to stay another 8 months, it is no longer "temporary" because the expectation has changed, even though you haven;t been there a year yet.

If the assignment is temporary, the company can provide you food and lodging assistance up to your actual costs (if you prove them with receipts) or up to the federal per diem rate (which varies depending on location) on a tax-free basis. If the assignment is not considered temporary according to the rules, then the per diem or reimbursement must be included in your taxable income on your W-2 and is subject to income tax and social security and medicare tax withholding.