IRS Creates New Standard Pay for Business Travelers

Americans love to travel for business, and the IRS is looking for a way to make it a bit more financially feasible for them.

According to the American Express Business Travel Survey, a full 91% of respondents reported enjoying traveling for business. Of that number, 62% explained that they enjoyed this option simply because they enjoy spending quality time, in person, with their colleagues, customers, and potential prospects.

However, traveling all the time can hamper a person’s well-being. Traveling for a job isn’t always just an overnight situation, considering that back in 2013 a full third of all domestic business trips included air travel. So when the survey respondents were asked which travel services are the most important when traveling, they responded back with: traveling in business class, access to the hotel’s concierge floors, and access to airport lounges.

With this in mind, hotel use around the country is growing. For perspective, 40% of hotel guests report traveling for business, but this can add up both for the employee and the employer.

So, the IRS is stepping in. They have recently announced a new per diem rate for taxpayers who travel for business, meaning they have made a new standard rate that will be paid to employees to cover their lodging, meals, and incidental expenses.

Typically speaking, a per diem rate is set forth by the IRS as a way for employers to reimburse employees for expenses when out on the road. Becuase they are mandated by the IRS, these wages aren’t considered a part of the employee’s annual earnings, as long as the payments are equal or less than the IRS’s specific rate. Anything above this price point is considered a business travel expense, which can be tax deductible if they are proven to be necessary expenses during the travel period.

And as reported by Forbes, an employee is considered to be traveling for business when they are away from home for a period “substantially longer than an ordinary day’s work, and you need to get sleep or rest to meet the demands of your work while away.”

The IRS updates these rates every year to coordinate with the increasing standard of living across the nation. The per diem rates go live on October 1, 2017, and can be used for business travel on or after this date. These rates differ depending on where the employee is traveling, whether it is to a high-cost locality or any other place in the country.

Other than that, all per diem information can be found via destination name or by zip code.

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