IRS updates per diem rates for 2020-2021

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The Internal Revenue Service issued the special per diem rates Friday for 2020-2021 that taxpayers can use to substantiate the amount of expenses they can deduct for lodging, meals and incidental expenses when they’re traveling away from home, effective Oct. 1, 2020.

Notice 2020-71 provides the special transportation industry rate, the rate for the incidental-expenses-only deduction, and 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 $66 for any travel locality within the continental United States and $71 for any travel locale outside the continental U.S. The rate for any locality of travel within or outside the 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 last year’s Notice 2019-55 are $292 for travel to any high-cost locality and $198 for travel to any other locality within the continental U.S. The amount of the $292 high rate and $198 low rate that’s treated as paid for meals for purposes of Section 274(n) is $71 for travel to any high-cost locality and $60 for travel to any other U.S. locality.

The per diem rates in lieu of the rates in Notice 2019-55 for the meal and incidental-expenses-only substantiation method are $71 for travel to any high-cost locale and $60 for travel to any other locale within the continental U.S.

For high-cost localities, the notice provides a table showing which counties have a federal per diem rate of $245 or more, and are high-cost localities for specific parts of the year.

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