Someone recently asked me about out of town travel and what expenses might be deductible.

 

I mentioned a different alternative that might mean a bigger deduction and if nothing more, would greatly simplify the expense reporting.

 

Consider using per diem allowances instead.  Per diem allowances eliminate the need for substantiating the actual costs.  The per diem amounts are deemed to be substantiated already by the IRS.  You will still need to document the business purpose of the trip.  But what a joy not to have to keep all those detailed records.  It is a blessing for both you and your employees.

 

The per diem amounts break down into two categories and the amount reimbursed can vary by whether you are in a high cost or low cost locality as defined by the IRS.  What gets allowed changes over time with the IRS, so check with your accountant or tax advisor for the latest rates and when the cutover period is.  The rates below are as of October 1, 2006.

 

	Lodging	Meals and Incidentals
High Cost Locality	188	58
Low Cost Locality	103	45

 

The previous rate change was as of October 1, 2005, so any travel in earlier 2006 would have to use those rates.  The meals and incidentals was the same rate, but lodging was at 168 and 96 for high cost and low cost localities, respectively.

 

Going on a trip or have people going on a trip?  Keep the paperwork simple and use per diems instead.

 

Check with your accountant or tax advisor for further details.