Tax Tips (and other stuff)

Road warriors know how to travel. They have the tricks of how to get through TSA, how to pack their carry-ons, etc. But even they can’t get out of the hassle of keeping track of travel costs, receipts, etc. There are cell phone apps that help. Using credit cards helps. But they still have to put together that “packet” of receipts to turn into their companies after the travel event to either get reimbursed or be allowed to continue using the company credit card.

The IRS is not all bad. After all, many IRS personnel travel a lot, too. So, there is a simple alternative. It’s called “per-diem.” Basically, if your employer gives you a per-diem allowance, you don’t need to keep expense receipts for lodging, meals, and incidental expenses. Just get “reimbursed” at the official per-diem rates per day.

There’s a catch. Per-diem only works for employees, not self-employed. If you are traveling on behalf of your own self-employed business, you still need to keep all your receipts and report actual expenses. If you own a Sub-S Corporation, or regular C Corporation, you are considered an employee and can use the per-diem route for travel.

So, here’s how it works. Each year, the Government Services Administration (GSA) sets the per-diem rates covering government employees in all states and territories. In addition to the standard rates for specific destinations, the GSA establishes rates for specified “high-cost areas.” Any area that isn’t specifically designated as a high-cost area is treated as a low-cost area.

For 2026, the per-diem rate for low-cost areas is $225 per day. For high-cost areas, the rate is $319. (To see a current list of high-cost areas, go to irs.gov/pub/irs-drop/n-25-54.pdf)

So, if you get a per-diem rate from your employer, if you manage to spend less than that rate (eat cheap, stay in low-cost lodging, etc.) you get to pocket the difference TAX FREE!

Let’s run an example. You travel to Mammoth Lakes (a high-cost area) for a business meeting. You get a McDonald’s breakfast sandwich and coffee for $4.85, your lunch is paid by the other party (cost $0) and treat yourself to a nice, modest dinner for $35. You stay in the local Motel 6 for $145 a night. Total cost to you, $184.73. You got $319 from your employer, so you pocketed $134.27. Hey! That paid for a lift-ticket for half-day/night skiing after your business meeting.

Another example. You go to Mammoth, have a nice breakfast ($18.50) lunch still paid by the other party ($0), stay at a nicer motel ($285). Total cost to you, $303.50. You still pocketed $15.50. Just no skiing.

If your employer is up for paying actual expenses, you could have a really nice breakfast ($30) stay at one of the lodges ($395) and get reimbursed for the total of $425.

Most employers love the per-diem because it forces their employees to be more frugal. Thus, you may not get the chance to get reimbursed actual expenses.

Have you heard? Prov 23:7a says, “for as he thinks about the cost, so he is.”

Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.