Today TaxMama® hears from Tim in the TaxQuips Forum with this question. “A relative was sent by his company to work far away from home in different places for weeks at a time. He was given a nonaccountable per diem that was included in Box 1 of his W-2. He did not save the hotel receipts from his stays (he knows to save them now). He does have his monthly credit card statements that show him paying Motel 6 in various cities. Looks like the IRS wants itemized hotel receipts in order to split food from lodging, but all his stays were at Motel 6, which does only lodging and no food. Can he still include lodging in his employee expense deduction with what he has?”
Yes, I would include it all.
Is he being audited? If not, he has no worries at this time.
True, Motel 6 doesn’t offer services, like meals. So if he’s got everything on credit cards AND has a calendar showing what city he worked in each week…?
However, I would not use the amounts he paid. I would look up the per diem rates for each location on the date of this stay and print them out. I would use the IRS per diem allowances. They will be higher than the fees at Motel 6.
You will find links to the Per Diem rates in TaxMama’s free resources. His deduction will end up being far more than his actual expense. Perhaps he can recoup some of the taxes paid on that money.
And remember, you can find answers to all kinds of questions about travel expenses and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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8 thoughts on “Missing Hotel Receipts”
H&R Block has a service called the Best of Both service.
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I am so sorry, Tim, THIS service isn’t designed for me to walk you through, line-by-line.
For a tax professional, this is really easy to do.
But then, this is WHAT we do.
Use the H&R BlockBest of Both service.
Thank you so much, Eva. Looking at Form 2106 has raised even more questions. Where does he claim his standard mileage expense for driving his vehicle to the faraway work locations? He thought it would be on Line 3 for travel away from home overnight. Now we are wondering if he has to do the whole Part II Vehicle Expenses section? The H&R software doesn’t seem to want to fill out that section.
One thing we think we understand in the Form 2106 instructions is allocating the reimbursement on Line 7. The $50/day the employer paid is called a “Mileage – Subsistence” Per Diem in the union contract. We assume we are to allocate it between Meals/Ent. (Col B) and Other (Col A) based on the percentages on those expenses on Line 6.
Hi Tim, aaaah fun. Just pick up all his travel, food, hotel costs and deduct the reimbursements on Form 2106, line 7
New wrinkle to this: I just found out the $50/day per diem his employer paid for each day he worked out of town was not reported on his W-2. His hourly wages are on the W-2 but the per diems are not. His actual expenses (travel, hotel, food) were more than $50/day. Can he still deduct the expenses as long as he reports the per diems received?
that was 2 percent rule not the 2$ rule. Sorry my hand slipped on the keyboard.
I believe that the per diem expenses are subject to the 2$ rule. In addition, itemized deductions must be more than the standard allowance to be useful.
The per diem includes hotel, food and incidental expenses. So even if the per-diem is more than the hotel there is nothing wrong with taking the per-diem. If actual expenses (with reciepts of course) are more than the per-diem then you can take the per-diem.
Yes, I am not only absolutely positive, but the right to use per diem rates has been sustained in audit after audit, including some Tax Court filings I have handled.
“Per Diem Allowance”? I am not sure where you saw that. I don’t remember using that phrase.
Your concern, Kenneth, is really about people who are self-employed using per diem rates for lodging.
Generally, they are only permitted to use per diems for meals and incidentals.
In this case, the person is an employee – so there is no question about his right to per diem rates.
As it happens, even when it comes to self-employed businesses, I have won on this issue repeatedly. Under special circumstances – using the Cohan Rule.
TaxMama, are you sure about claiming per diem rates for lodging, as opposed to actual lodging expenses? Publication 463, in the middle of its explanation of claiming the standard meal allowance, says “CAUTION! There is no optional standard lodging amount similar to the standard meal allowance. Your allowable lodging expense deduction is your actual cost.” https://www.irs.gov/publications/p463/ch01.html#en_US_2011_publink100033781
Further, I don’t think there is such a thing as an “IRS per diem allowance.” The federal government gives its employees per diem allowances for travel, and the IRS allows us to claim the published meals and incidental expenses per diem allowance as a business expense instead of keeping restaurant receipts.