No, you can not deduct rent, utilities, expenses while on assignment in Arizona. These expenses are considered normal living expenses and not business expenses.
Generally, Per Diem is not considered to be non-taxable income there are two methods of accounting for Per Diem
- Accountable Plan: a plan where the employee is required to adequately account for any expenses that were used on his or her business trip. Any money issued by the employer that was not spent or cannot be accounted for is required to be repaid back to them. If you spent the entire Per Diem and you use your own funds to account for business expenses, then the amount that you personally spent will be reported on Form 2106.
- Non-Accountable Plan: a plan where the employee is not required to provide proof of expenses that were used. The employer will issue the Per Diem amount to the employee. If the entire Per Diem was not used, then the employee may keep the remaining portion. If the employee used more than the Per Diem allowance, then the remaining portion can be deducted on Form 2106. The employer will report the total in box 1 as wages on the Form W-2 if there is any reimbursement or other expense allowance paid to the taxpayer.
[Edited 03/26/2019 | 1:10 pm PDT]
