perdiem

Per diem is a daily allowance provided to cover travel expenses associated with business trips. It is commonly paid to employees, consultants, and government officials traveling on official business. Per diem can be issued as a fixed daily amount or as reimbursement and is intended to cover lodging, meals, and incidental expenses without requiring itemized receipts for every cost.

Typically, per diem is divided into lodging and meals and incidental expenses (M&IE). Rates are set by organizational policy and may vary by location, duration of travel, and purpose. Some employers provide separate lodging and M&IE allowances, while others use a single combined daily amount. Government agencies and large corporations often align rates with public schedules that reflect local costs.

Administration and tax treatment: When paid under an accountable plan, amounts up to the official daily rate that are properly substantiated are usually tax-free; excess or non-substantiated portions may be treated as taxable income. If the allowance is not under an accountable plan, per diem payments are generally taxable. Policies differ, and some plans require receipts for certain expenses or trips.

International considerations: Per diem practices vary by country and by organization, and exchange rates can affect the value of the allowance. The term per diem comes from Latin, meaning by the day, and is widely used in corporate and government travel policies to simplify budgeting and reimbursement.