The IRS simply introduced adjustments to the per diem charges that freelancers and different taxpayers use to substantiate the quantity of bizarre and mandatory enterprise bills they will declare whereas touring away from residence. Because of this underneath the brand new per diem charges, the per diem substantiation methodology will yield higher quantities. The adjustments went into impact beginning Oct. 1, 2023.

Right here’s how the per diem guidelines work for freelance enterprise journey based on IRS steerage:

Below the per diem substantiation methodology, should you pay a per diem allowance in lieu of reimbursing an worker’s precise bills for lodging, meals, and incidental bills, the quantity substantiated for every calendar day is recognized because the lesser of: 1) the allowance quantity for that day or 2) the quantity calculated underneath present federal per diem charges for the place of journey throughout the continental United States (CONUS). 

Remember that a separate federal fee applies to per diem allowances only for meals and incidental bills. If you’re utilizing the charges and the listing of localities supplied by the IRS, you have to additionally adjust to these guidelines for the per diem substantiation methodology.

This location-based, high-low substantiation methodology applies a higher fee to designated high-cost localities and a decrease fee to all different localities. At present, the charges are as follows:

• $309 for journey to any high-cost locality and $214 for journey to every other locality throughout the continental U.S. The quantity of the $309 high fee and $214 low fee that’s handled as paid for meals is $74 for journey to any high-cost locale and $64 for journey to every other locality inside CONUS.
• Below the meal and incidental expenses-only substantiation methodology, per diem charges are $74 for journey to any high-cost locality and $64 for journey to every other locality throughout the CONUS.

The IRS has additionally revised the listing of high-cost localities for the upcoming new annual interval (Oct. 1, 2023, to Sept. 30, 2024) for which the brand new charges are in impact. Excessive-cost localities have a federal per-diem fee of not less than $261 per day. It is vital that you just examine this per diem per locality itemizing as properly, particularly if in case you have used these charges up to now as a result of adjustments do happen. For instance, Los Angeles, Calif., and Portland, Ore., have been faraway from the listing of high-cost localities as of October 1, 2023.

There are additionally particular per diem charges for taxpayers within the transportation trade together with meals and incidental expense charges of $69 for any locality of journey inside CONUS and $74 for localities of journey outdoors CONUS, these stay similar as the present per diem charges. The speed for incidental bills stays $5 per day, for journey in  and out of doors CONUS.

It’s essential to just be sure you monitor your entire bills as a freelancer and freelance enterprise proprietor in order that your data are correct and also you cut back the danger of an audit. You probably have questions in regard to per diem charges for freelance companies, please contact a professional tax skilled who focuses on taxes for the self-employed.

Jonathan Medows is a NYC-based CPA who focuses on taxes for consultants throughout the nation. His website has a useful resource part with how-to articles and knowledge for freelancers. https://www.cpaforfreelancers.com/