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IRS UPDATES PER DIEM GUIDANCE FOR BUSINESS TRAVELERS

 

The Internal Revenue Service (IRS) recently issued Revenue Procedure 2019-48 (Rev. Proc. 2019-48), which provides guidance for business travelers, updated to include changes resulting from the Tax Cuts and Jobs Act of 2017 (TCJA).

A section of the Tax Cuts and Jobs Act amended § 67 of the Internal Revenue Code (Code) to suspend all miscellaneous itemized deductions for taxable years beginning after December 31, 2017, and before January 1, 2026. In addition, the TCJA amended § 274 of the Code to generally disallow a deduction for expenses with respect to entertainment, amusement, or recreation for amounts incurred or paid after December 31, 2017.

Rev. Proc. 2019-48 modifies Rev. Proc. 2011-47 and 2011-42 I.R.B. 520, to incorporate the changes made by the TCJA and provides rules for using a per diem rate to substantiate the amount of ordinary and necessary business expenses paid or incurred while workers are traveling away from home.

Taxpayers are not required to use the method described in Rev. Proc. 2019-48 and may substantiate actual allowable expenses in other permitted methods, which require that taxpayers maintain adequate records.

The TCJA suspended the miscellaneous itemized deduction available to employees for non-reimbursed business expenses. This legislation disallows a deduction for expenses for entertainment, amusement, or recreation paid or incurred after December 31, 2017.

The self-employed individuals and certain employees, such as Armed Forces reservists, fee-basis state or local government officials, eligible educators, and qualified performing artists that lost these deductions may still deduct unreimbursed expenses for travel away from home, and may still use per diem rates for meals and incidental expenses, or incidental expenses only.

Rev. Proc. 2019-48 clearly states that otherwise, allowable meal expenses remain deductible if the food and beverages are purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment. This revenue procedure provides rules for using a per diem rate to substantiate the amount of these expenses

If you are a traveling worker and have any questions about the deduction of your expenses, call The Gartzman Law Firm at (770) 939-7710. An experienced tax attorney can help you. Use our simple contact form to arrange a free consultation today.

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