October 4, 2010 12:00 am

New High-Low T&E Rates

The IRS has announced the new rates used for reimbursing employees on a per diem basis for their travel to certain areas within the country. For simplicity, employers can use the rates fixed by the IRS under a high-low substantiation method.

New Rates

The rates that apply for the government’s fiscal year starting October 1, 2010, through September 30, 2011, are $233 per day to high-cost areas and $160 per day for travel to all other areas within the continental United States. These rates cover the cost of lodging, meals, and incidental expenses. The rates are lower than the rates that applied from October 1, 2009, through September 30, 2010, which were $258 for high-cost areas and $163 for low-cost areas.

Note: Employers may opt to continue reimbursements for the balance of 2010 using the rates that have been in effect for the three prior quarters of 2010 (i.e., the rates for the government’s prior fiscal year).

New Locations

Some of the locations designated at high-cost areas have changed, with new areas added and one area removed from the list. Also, the period of the year in which high-cost designation applies has been changed for some locations.

Other Rules Remain Unchanged

Self-employed individuals, as well as employees who are not reimbursed for travel expenses, cannot use the rates listed above to substantiate their travel costs. They must obtain receipts for actual expenses. However, such individuals can use the government’s per diem rate for meals and incidental expenses, or incidental expenses only, to substantiate these items.

Source: Rev. Proc. 2010-39


Tax Glossary

Residence interest

Term for deductible mortgage interest on a principal residence and a second home.

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