The Internal Revenue Service has issued the special per diem rates that take effect Oct. 1, 2021, which taxpayers can use to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home.
Notice 2021-52 includes the special transportation industry rate, the rate for the incidental-expenses-only deduction, along with the rates and list of high-cost localities for purposes of the high-low substantiation method.
The special meal and incidental expenses rates for taxpayers in the transportation industry are $69 for any location in the continental United States and $74 for any locality outside the continental U.S. The rate for any travel locale inside or outside the continental U.S. for the incidental-expenses-only deduction is $5 per day.
For purposes of the high-low substantiation method, the per diem rates in lieu of the rates in the earlier Notice 2020-71 (the per diem substantiation method) are $296 for travel to any high-cost locality and $202 for travel to any other locality within the continental U.S. The amount of the $296 high rate and $202 low rate that’s treated as paid for meals is $74 for travel to any high-cost locale and $64 for travel to any other locality within the continental U.S.
The per diem rates in lieu of the rates described in Notice 2020-71 (the meal and incidental-expenses-only substantiation method) are $74 for travel to any high-cost locality and $64 for travel to any other locality within the continental U.S.
The notice includes a list of high-cost localities that have a federal per diem rate of $249 or more.
The earlier Rev. Proc. 2019-48 provides the rules for using per diem rates, rather than actual expenses, to substantiate the amount of expenses for lodging, meals, and incidental expenses for travel away from home. Taxpayers who use per diem rates to substantiate the amount of travel expenses under Rev. Proc. 2019-48 can use the federal per diem rates published annually by the General Services Administration. Rev. Proc. 2019-48 permits certain taxpayers to use a special transportation industry rate or to use rates under a high-low substantiation method for certain high-cost localities. The IRS announces the rates and the rate for the incidental expenses only deduction in an annual notice.
“Use of a per diem substantiation method is not mandatory, the IRS noted. “A taxpayer may substantiate actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.”