Topic Thread

1.  Per Diem VS Housing Allowance

Posted 07-14-2017 16:16
We have a summer intern program where we pay $500 per month for housing while they live and work in one of our locations.  They submit documentation for their rent in order for the allowance to be non taxable for the amount they can substantiate and the remaining they can keep, but it's taxable.  Our HR group would like to change this to a Per Diem so that the interns can get the full amount as non taxable.  Am I right that they still would need to substantiate the expense in some way?  Also, we would not pay them for M&I, just the lodging.  I feel the Per Diem would make this much more complicated and I'm not certain this is an appropriate use of a Per Diem since they are securing a pace to live for the summer months they work for us, and they are not traveling to various sites.  I'd like to get some opinions, and also I would be interested to know how other companies handle summer intern housing.  Thanks

Krista Laufenberg CPA
J. F. Ahern
West Bend WI
(920) 907-5160

2.  RE: Per Diem VS Housing Allowance

Posted 07-17-2017 13:12

IRS Publication 463, Travel, Entertainment, Gift and Car Expenses may be helpful. The guidance includes a discussion on "Accountable Plans" and, in particular, per diem and "Adequate Accounting" (see Reimbursements).

There is an IRS web page...not sure if it is current, that provides reasons for some caution when designing your expense reimbursement program.

IRS Provides Guidance on Per Diem Expense Reimbursements Paid By Employers

I hope this is helpful.

Tab Tsukuda
Director, Government Contract Accounting, Compliance & Audit
Gilbane Federal
Concord CA
(925) 946-3238