The Internal Revenue Service has issued new rules for travel, lodging, meals and other expenses, including an optional method for computing the deductible costs.
Revenue Procedure 2009-47 provides rules for employees who are reimbursed for lodging, meals, and incidental expenses, or meals and incidental expenses only, while traveling away from home, to substantiate the expenses by per diem allowance in lieu of actual expenses.
The revenue procedure also provides an optional method for employees and self-employed individuals who are not reimbursed to use in computing the deductible costs they pay or incur for business meal and incidental expenses, or for incidental expenses only if they pay or incur no meal expenses, while traveling away from home.
Use of a method described in the revenue procedure is not mandatory, and a taxpayer may use actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.
The annual update to the IRS's substantiation rules on business expenses adjusts the general federal meal and incidental expenses per diem rate for the continental United States to $59, and $65 for outside the continental U.S.
Taxpayers who use the high-low substantiation method with lodging expenses get a $258 per diem rate for high-cost locations, or $163 for other locales within the continental U.S.
Among the high-cost destinations listed by the IRS this year are Monterey, Calif.; Bar Harbor, Maine; Palm Beach, Fla.; and Hershey, Pa.
Revenue Procedure 2009-47 will be in IRB 2009-42, dated Oct. 19, 2009.