I received a per diem from my employer while traveling outside of the country. The per diem was $50/day. The employer does not require employees to submit receipts to substantiate expenses. However, the amount is below the per diem limits. Is this amount considered taxable? I received a 1099 from my employer for this. I do have receipts that substantiate food expenses incurred while traveling. Can I deduct the expenses incurred from the income received from my per diem??
Yes, if your per diem payments were reported to you on Form 1099, you will include this income on your tax return.
To offset this income, you may report your actual expenses as Job-Related itemized deductions. However, to deduct employee business expenses, your total miscellaneous deductions must be more than 2% of your Adjusted Gross Income. And you must have more itemized deductions (ie: medical, mortgage interest, property taxes, charitable giving, etc.) than the Standard Deduction. (TurboTax calculates this for you, based on your entries.)
The easiest way to find any section of TurboTax is to use the Search box at the top right side of the TurboTax header. Click on the magnifying glass, type in the topic you need, hit Enter, and click the "jump to" link to go directly to beginning of this topic.
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To report the income, search on "1099-MISC" and for your expenses, search on "2106" (the form number).
Yes, if your per diem payments were reported to you on Form 1099, you will include this income on your tax return.
To offset this income, you may report your actual expenses as Job-Related itemized deductions. However, to deduct employee business expenses, your total miscellaneous deductions must be more than 2% of your Adjusted Gross Income. And you must have more itemized deductions (ie: medical, mortgage interest, property taxes, charitable giving, etc.) than the Standard Deduction. (TurboTax calculates this for you, based on your entries.)
The easiest way to find any section of TurboTax is to use the Search box at the top right side of the TurboTax header. Click on the magnifying glass, type in the topic you need, hit Enter, and click the "jump to" link to go directly to beginning of this topic.
Or go to My Account >> Tools >> Topic Search. Type in your topic, then click the topic in the list to go directly to the start of this section.
To report the income, search on "1099-MISC" and for your expenses, search on "2106" (the form number).
Any per diem you were paid but cannot deduct (for example if your situation forces you to take the Standard Deduction) is taxable income regardless of how it got reported to the IRS (if at all). Some employers list it as PER DIEM in box 14 of the W-2.
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.prn.pdf</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.
being a union hand we do not get a 1099 for per diem or truck pay. they did that few years ago and quickly fixed it when the spread was going to leave. if you're going to work out of state i would hire a cpa to do you're taxes because you will get audited and they are very nice to have when that happens. i just paid 3400 this year from an audit because h&r block wouldnt back me or help me and even kept my past records from me for months. i would claim you're days out, dependents, any sales or property tax, a work phone and any union dues or charities you paid. there are a few more but i would not itemize because the audit is a pain and with the above claims you will max out anyway. hope this helps
I've worked for many years as a contractor one year I did 1099 with a separate per diem payment.
I always check the GSA site and stay under the the daily limit.
The whole idea of per diem is to give workers that have to travel outside of their home state who incur business travel expenses a fair break on not having to pay out of net income. Because its not income. It is meant to level the playing field so that you earn income and pay tax similar to someone working a local job.
Great tip, follow up question. What if employer does all that but pays flat daily $50.00. Can I claim the difference between the two. Location minus $50?
UWSmom Great tip thank you. Follow up question? What if employer does all that but pays flat daily $50.00. Can I claim the difference between the two. Location minus $50?
No.
This is a very old thread.
Employees are no longer able to claim "Employee Expenses" on Schedule A as they had in the past.
Your Employer may setup an "accountable plan" where you can get reimbursed for your expenses, and the reimbursements are not reported as taxable income by you.
The itemized deduction for unreimbursed job expenses has been suspended in tax years 2018 through 2025. There are some exceptions, if you were an:
State taxes: Job-related expenses might be deductible in your state even if they’re not deductible on your federal return. You can enter your expenses, see the instructions here, and TurboTax will figure that out.
If you’re self-employed or own a business, enter your business-related expenses on Schedule C instead. @Ssj1