Travel expenses rack up quickly whether one is traveling for business or pleasure.
For tax-paying business travelers, the Internal Revenue Service recently updated its annual rates for special per diem expenses – incidentals, transportation and high-cost localities – for the 2012-2013 fiscal year.
The following rates are in effect for taxpayers traveling away from home on or after October 1:
- Incidental expenses – The IRS definition of incidentals has changed: Transportation between places of lodging or business and places where meals are taken and the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings are no longer included in incidental expenses. Therefore, incidental expenses now include only fees given to porters, baggage carriers, hotel staff, and staff on ships. The per diem rate for the incidental-expenses-only deduction is $5 per day for any locality of travel.
- Transportation industry – The special meals and incidental expenses rates for taxpayers in the transportation industry are $59 for any locality of travel in the continental United States and $65 for any locality of travel outside the continental United States.
- High-low substantiation method – For purposes of the high-low substantiation method, the per diem rates are $242 for travel to any high-cost locality and $163 for travel to any other locality within the continental United States.
The IRS will no longer provide annual updates to the general per diem rates for substantiating deductible expenses or employer-paid allowances for lodging, meals, and incidental expenses incurred in business-related travel away from home, except for the special transportation industry rate, the incidental-expenses-only rate, and the list of high-cost localities.
