PerDiem limits and who is responsible of error - employer or employee?

Question

I am getting 70k in perdiem and 80k on w2. my employer never asked me for any receipts, they just give me 5800 every month for perdiem. If this is not right then who should be responsible me or my employer?

Answer 1

You are responsible.  The employer can give you 10 million dollars for per diem if they want to.  It's taxable to you except for the amount actually spend on allowable expenses.  Since they don't have you provide receipts, you have to keep them yourself and report the whole per diem as income, then deduct the valid expenses.  They should, though, be including the per diem amount on your W-2.  If they don't, though, it doesn't mean that YOU don't owe the tax, it just means it will take longer for you to get caught, which will mean penalties and interest.

Answer 2

You receive an $80K salary and $70K per diem, and you're concerned the per diem is incorrect?  Is that what you're saying?  Or that the perdiem on your W-2 should be $70K?

Since you didn't report your actual expenses to your employer, you are on a non-accountable plan.  For your employer to use a per diem rate in this case is perfectly acceptable.  The rate might be a bit on the high side, but it's hard to tell without more information.

In a nonaccountable plan, your employer must report your expense allowance on your W-2 as part of your income.  Your employer is responsible for keeping track of the total per diem paid to you.  You are to keep track of your actual expenses.  When you file your tax return, if it is beneficial to you, you file Form 2106-Employee Business Expenses, report ALL of your actual expenses, and ALL of your allowance.  Any excess expenses, you may be able to claim a deduction for.

Hope this helps!!  Any other questions, just ask!!

Answer 3

As noted before do your employee business reimbursement tax form. If the perdiem is added in the wages box then it is taxed. Make sure you do the proper form so you dont pay taxes on it. If you know your expenses are much lower than your per diem maybe buy something big used only for business. Business expenses must be ordinary and necessary. Any home office deduction space must be used 100% for work no personal use at all.

Answer 4

Your income is 150K. You must report this on your tax return. You will claim deduction for employee business expenses.

If 70K is reported on W2, you will claim expenses as itemized deduction. Read: http://taxipay.blogspot.com/2008/05/item...

If 70K is reported on 1099-Misc, you will report this on schedule C or C-EZ and claim expenses. Read: http://taxipay.blogspot.com/2008/03/w2-o...