Per Diem included as income on W-2

[Clayeve]

I work in the transportation industry and when traveling I get a daily per diem rate that is less than the federal rate.  Unfortunately my employer included my per diem as part of income on my W-2.  How, or more importantly where, do I deduct this amount from my wages in turbo tax?  Is there a code I should use in box 12?  

[BillM223]

Is there a code L in box 12 on your W-2? That would be the code for "if you [ i.e., your employer] reimbursed your employee for employee business expenses using a per diem or mileage allowance and the amount that you reimbursed exceeds the amount treated as substantiated under IRS rules". See W-2 Instructions, page 20.

The code L amount should not be included in Wages in boxes 1, 3, or 5, only the amount of the per diem that is more than "substantiated under IRS rules." In fact, as I read this, it appears that your employer should not have used code L if your per diem was less than the federal rate.

I take it that your employer added the full per diem rates to Wages in boxes 1, 3, and 5? Did they mean to do that? Have you asked for a corrected W-2?

[Clayeve]

No I do not have a “L” in box 12.

[CatinaT1]

You will need to ask your employer for a corrected W2, reporting this amount correctly, and not included in your wages.

Additionally, there is no way to make up the difference between your company's per diem and the federal per diem amount. The previous deduction for job-related expenses or other miscellaneous itemized deductions that exceeded 2 percent of your adjusted gross income is suspended. 

This includes unreimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel, as well as any deductions you may have previously been able to claim for tax preparation fees and investment expenses, including investment management fees, safe deposit box fees and investment expenses from pass-through entities.