Per Diem
What is Per Diem?
A per diem is a predetermined daily payment given to employees on business trips to cover meals, lodging, and minor incidentals. Rather than submitting individual receipts, travelers receive a standard allowance based on location and duration.
Government agencies and corporations often follow official per diem rates, such as those set by the U.S. General Services Administration (GSA) or IRS guidelines. Rates differ by city and country, reflecting variations in cost of living. Per diem simplifies corporate travel expense reporting, ensures tax compliance, and reduces administrative workload for both employees and finance teams.
Examples Of Per Diem
1.
Meals And Incidentals
A Consultant Traveling To New York Receives A $74 Per Diem For Meals And Incidentals Instead Of Submitting Meal Receipts.
2.
Lodging Allowance
A Company Provides A Per Diem Of $200 For Lodging In San Francisco To Comply With Corporate Travel Budgets.
3.
International Travel Rates
An Employee On An Overseas Assignment Receives A Per Diem Based On Government-Set Foreign Travel Rates.
Frequently Asked Questions About Per Diem
1.
How is per diem calculated?
Per diem is determined using government or company-set rates that vary by city and typically cover lodging, meals, and incidental expenses.
2.
Is per diem taxable?
Per diem is non-taxable if it adheres to IRS or government-set rates and is properly documented; amounts exceeding these rates may be taxed.
3.
Do employees need to submit receipts for per diem?
No, per diem eliminates the need for detailed receipts for meals and incidental expenses.
4.
Can per diem rates vary by location?
Yes, per diem rates differ based on destination, season, and local cost of living.
5.
How do companies set per diem rates?
Organizations use official government rates (like GSA or IRS) or establish custom rates according to travel budgets and policies.