Take Note of New Changes in Employee Benefits
Per Diem is an employee benefit, the daily allowance for lodging, meals, and incidental expenses given to a prevailing wage worker who is on travel for work. It is the amount that your prevailing wage workers can spend on a business trip, and when attending work-related events and conferences.
IRS Updates its High-Low Per Diem Rates
The Internal Revenue Service updated its special per diem rates for the transportation industry, what incidental expenses are covered, and its high-low method. The new rates and updates were announced last September 25 became effective starting October 1.
The IRS’ high-low rates were raised from $282 to $284 for travels to any high-cost locality. For travels to other localities, in the continental US, the per diem rate was raised from $189 to $191. Rates for meals and incidental expenses both remained at $68 and $57.
New Localities Categorized as High-Cost
The IRS added new seven localities to its list of high-cost places. These high-cost localities refer to places with a federal per diem of at least $238. The new addition to the high-cost localities include:
- Oakland, California
- Lewes, Delaware
- Fort Myers, Florida
- Hyannis, Massachusetts
- Petoskey, Michigan
- Portland, Oregon
- Vancouver, Washington
There were also other places that were removed from the high-cost localities list of the IRS. These are:
- Sedona, Arizona
- Los Angeles, California
- Vero Beach, Florida
- Kill Devil, North Carolina
Definition of Incidental Expenses
The high-low rates established by the IRS cover your prevailing wage worker’s expenses for meals, lodging, and incidental expenses during a business trip. But what does incidental expenses even mean?
Incidental expenses can include tips to porters, baggage carriers, and hotel staff. These expenses are reimbursable by the company. The following are not considered as incidental expenses:
- Transportation between places of lodging or business, and places where the prevailing wage employee has his meals
- Mailing travel vouchers expenses
- Cost of paying bills for purchases incurred on employee- sponsored credit cards
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