Processing per diem

What is per diem?

Per diem is an allowance paid to employees for lodging, meals, and incidental expenses incurred when traveling. This allowance is in lieu of paying their actual travel expenses.

How to pay out per diem

• Per diem can be paid to Employees as a non-taxed reimbursement if certain conditions are met.
• Per diem must be reported for Independent Contractors as taxable wage.

Per diem and Employees

Per diem payments to employees can be paid as a non-taxed reimbursement (i.e., not a part of the employee’s wages not reported on the employee's W-2) as long as:

1. The payment is equal to or less than the federal per diem rates

and

1. The employer has a proper expense report as documentation.
   1. The expense report must include the date, time, place, amount and business purpose of the trip.
   2. The employee and approver must sign the report and it must be filed with the employer within a reasonable period of time (60 days)
   3. Your workforce lead can provide templates for expense reports by individual or location

As long as both of these conditions are met, the per diem to the Employee can be processed as a reimbursement.

Please coordinate paying per diem to employees as a reimbursement with your Workforce Lead as part of payroll.

Per diem and Independent Contractors

Per diem must be reported to Independent Contractors as taxable wage on the 1099-NEC. They can deduct per diem costs on their taxes as a business deduction, subject to any applicable limitations.

See also: How to code expenses

Please coordinate paying per diem to independent contractors as taxable wage with your Financial Operations Lead.

See also:

Per diem explained here and Frequently Asked Questions about per diem