IRS Sets Per Diem Rates for Lodging, Meals and Incidental Expenses

The Internal Revenue Service has set the per diem rates that taxpayers can use to substantiate the amount of expenses for lodging, meals and incidental expenses when traveling away from home.

Notice 2013-65 announces the special per diem rates, effective Oct. 1, 2013, which taxpayers may use in the year ahead to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home. The annually announced rates are the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method.

Rev. Proc. 2011-47 provides the rules for using per diem rates, rather than actual expenses, to substantiate the amount of expenses for lodging, meals, and incidental expenses for travel away from home. Taxpayers who may use per diem rates to substantiate the amount of travel expenses under Rev. Proc. 2011-47 may use the federal per diem rates published annually by the General Services Administration, the IRS pointed out. Rev. Proc. 2011-47 allows certain taxpayers to use a special transportation industry rate or rates under a high-low substantiation method for certain high-cost localities.

The IRS announces these rates and the rate for the incidental expenses only deduction in an annual notice.

“Use of a per diem substantiation method is not mandatory,” the IRS pointed out. “A taxpayer may substantiate actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.”

Notice 2013-65 will be published in Internal Revenue Bulletin 2013-42 on Oct. 15, 2013

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