Rules for Per Diem

I just went and looked, and unless it changed again back in 2019 the tax laws changed. Unreimbursed business expenses (of which per diem is) are no longer allowed to be deducted by an employee, only self-employed can do that.

Might want to look at How Tax Reform Changes (and Doesn’t Change) Per Diems for Truck Drivers and talk to your CPA about it.

 

Actually it was written to inform about the 2019 changes.

 

@ZVar, you are correct in the statements that employees can no longer deduct non-reimbursed employee expenses.

however, as an employer I am perfectly legal to pay my employees a daily stipend to reimburse them for their daily expenses. Such a payment is a reimbursement of expenses, and therefore not wages. And, happily, fully deductible as a business expense.

Now, because I am so generous, it is also true that employees are willing to work for me for a lower daily wage. Essentially, the employee receives less compensation in wages, reducing things like payroll taxes and income taxes, which makes them happy. Taxes go down, but their total compensation remains equal (everybody’s “plan” is different, but that’s the general idea).

now, as an employer, I also save on payroll tax, work comp, 401K matches, etc, so I am very happy to offer this option to the drivers at no cost to them.

 

We pay the full payment allowed by the IRS, i.e. 80% of $66, and 75% of 80% of $66 for partials. I forget what the Canadian rate is, but it's a little higher.

All it is, is a game of "hide the pea under the shell", but I am a firm believer in keeping the Government away from my money as much as legally possible.

 

– Canada Revenue Agency (CRA) has changed the rate at which drivers can claim meal expenses using the simplified method from 80% of $17 to $23 per meal.

The changes are retroactive to Jan. 1, 2020.

 

October 1st 2020 was the latest changes to per diem. There is a good article in Forbes explaining the changes.
Also a few years ago I remember the IRS had rules as to who qualifies for per diem. I don't know if they are still valid, but it had to do with having a physical address that the per diem recipient pays at least a portion of the bills.