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Teipen offers per-diem business travel expense guidance

Posted on December 9, 2019

Business travel is vital, necessary and commonplace for many types of businesses. But, according to the experienced business CPAs at Teipen Selanders Poynter & Ayres, documenting business travel expenses should be thoroughly vetted.

Even though travel per diem rates relating to the Tax Cuts and Jobs Act (TCJA) have been in effect since October 1, 2019, the IRS periodically issues guidance and warnings about common practices. A recent IRS notice clarified some details, and caught our attention.

Here’s what to know:

  • The IRS is looking at business travel expenses more closely since changes resulted from the TCJA. In fact, says Mike Poynter, CPA at TPSA, IRS rules for using per diem rates to substantiate ordinary and necessary business expenses paid or incurred while traveling, have been tightened.
  • TCJA suspended the miscellaneous itemized deduction employees could take for non-reimbursed business expenses, self-employed individuals (and Armed Forces reservists, fee-basis state or local government officials, eligible educators, and qualified performing artists), that allowed deduct unreimbursed expenses for travel away from home. These folks may still use per diem rates for meals and incidental expenses, or incidental expenses only.
  • TCJA also amended prior rules to disallow a deduction for expenses for entertainment, amusement, or recreation paid or incurred after Dec. 31, 2017.  Allowable meal expenses remain deductible if the food and beverages are purchased or stated separately from the cost of the entertainment.

The bottom line? Accuracy in itemizing and reporting business travel expenses are more important than ever. Our CPA business team recommends close scrutiny, especially as the year closes.