The way it works is that the IRS

The way it works is that the IRS has a table indicating the amount of deduction you can take on a daily basis for meals and incidentals while traveling away from home. If you choose to use this flat, per diem amount, you do not have to keep track of the receipts for these expenses. If you are not an owner in the MBT Kimondo Shoes, you can even use the per diem method for travel and lodging. Owners can only use the per diem method for meals and incidentals.

Of course, per diem allowances, like deductions for actual expenses, may be used only if the time, place and business purpose of the travel are substantiated by adequate records or other evidence.

The IRS has issued per diem rates based upon the Continental United States ("CONUS") travel and foreign travel. New CONUS per diem rates become effective on October 1 of each year, and remain in effect through September 30 of the following year. Federal rates are on the Internet at http://www.gsa.gov/.

If employee expenses are substantiated using a per diem amount, and reimbursement exceeds the relevant federal rates for that type of allowance, then the employee is required to include the excess in gross income. The excess portion must be reported on the employee's W-2 and is subject to MBT Changa Birch,withholding. However, as long as the reimbursement amount does not exceed the relevant federal rates, then the amount is not taxable to the employee!

Other technical rules apply to using per diem rates. Be sure to work with your CPA to make sure you are following all of the technical rules before using the per diem method for documenting travel expenses.