Please note: Anyone can reply to this.
Just click this heading "About per diem", then click Reply. Be sure to click Enter when your done.I'm not really sure yet why all employers don't offer per diem to travelling salaried employees.
So I'm researching it. My example uses a fictional employer "Acme" and an employee "Wiley Coyotee".
I also use easy numbers, $20 per hour (or $160 a day) and a per diem rate of $80 per day.
The per diem rates are much higher. See IRS Publication 1542
Please Note: The per diem is not on top of the $160 a day, it comes out of it. The way I understand it:
- If Acme pays $160 per day, and offers per diem using the non-accountable plan
Both Acme and Wiley pay Fica taxes on only $80 a day.
- If Acme decides not offer per diem, they still pay $160 a day.
Plus, Acme pays 7% extra in Fica for the non-taxable per diem they decided not to offer.
In this case, both Acme and Wiley would pay almost $6 a day (or $1,500 a year) extra in taxes.
Wiley he has to pay a tax guy to go through his reciepts to categorize them as allowable or not.
- I'd think using per diem, everybody would save on taxes. But I'm not a tax guy. Set up might be a small pain, but I don't know.
It should be something an employer can set up in Quick Books. Quote: To create a non-taxed per diem payroll item, follow the steps in this Knowledge Base Article. However, you should be aware that not all per diem paid to employees is tax free. The deciding factor is whether you are using an accountable plan (where the employee submits receipts for expenses paid) or a non-accountable plan (where a flat rate is paid to the employee and no accounting of the money spent is required). See quickbooksgroup.com.
I've only seen the non-accountable plan implemented, which is a no-brainer.
The down side of it is, the employee appears to make $10 an hour.
Unemployment benefits, disability, and the income figures decrease.