I work for a company that sends me out of state for work. Sometimes I get paid per diem that doesn't cover the IRS allowable deduction for hotels and meals. Can I deduct the difference? Also, can I claim mileage from the hotel to the work-site while out of town?

ANSWER

The BIDaWIZ Team's Answer:

If you are incurring business expenses in excess of the Per Diem amount paid by your employer, then you can deduct them by using Form 2106 as per IRS Publication 463 & IRC Section 274(d). The total business expenses you incurred are then deducted on Schedule A as a miscellaneous itemized deduction. Unfortunately, there is a 2% floor on this type of expense. That means that you can only deduct these expenses to the extent they exceed 2% of your Adjusted Gross Income, and only it you itemize. If you're asking whether or not you can deduct the difference even if you didn't incur out of pocket expenses, the answer is no. In terms of mileage, it depends on if your employer reimburses you or not. When your employer does not provide any mileage reimbursements, you can report the entire amount of your expenses (using either the actual expense or standard mileage method) on Schedule A with your other "job expenses and certain miscellaneous deductions." The total of all expenses you report in this category must be reduced by two percent of your adjusted gross income as previously mentioned. The detail of your expenses will be shown on Form 2106. If your employer has a policy that covers reimbursements or allowances for mileage, you can only deduct the amount that is not covered by the reimbursement policy. Your Form 2106 will show your expenses and the amount of employer reimbursement; the difference between the two will be your deduction.