OT: per diem related

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avi101

Registered Users (C)
It is seems many desi companies use per-diem as an incentive for higher pay. Is it legal?

e.g.
if the net pay for the consultant is say $60/hr (billing rate - company margin - company taxes), they say that they would pay 20/hr out of this as per diem (even if the consultant is not travelling much\too far).
 
Depends on the prevailing wage. As long as company pays the wages mentioned in offer letter and the wages payed are more than the prevailing wage you must be ok. Companies write off things like immigration fee, travel, hotel, food etc.. as expenses. It is very useful when you do not want all these to go out from your taxable income. Talk in detail about the breakup. You can ask your company to document the perdiem as wages or allowances and also tear apart things like housing etc.. as expenses.

I may not be 100% rite. Lets wait for responses from other members.
 
Apologize for this off topic discussion. Dates are not moving anyways.. atleast lets see if we can learn something else.

http://p222.ezboard.com/fcomputerco...stions.showMessage?topicID=1346.topic&index=2

With the little research I did, it seemed like many consulting (desi?) companies are blatantly violating the per diem rules on multiple fronts, and has the potential to cause trouble both to the company as well as to the consultant. Seems like one of the things that people don't want to know.

Would really like to hear from more members on what they think\experiences.
 
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right, there are some rules, like per diem has different rates in different cities. For eg, I used to get paid $46 per diem when I was travelling to Las Vegas for meals only. That is the standard per diem for that city.

Per diem is a part of expenses. You can have your employer pay you for relocation. That is not per diem. Your employer can pay you when you are on bench, that is not per diem. Your employer can pay you (must pay) for a week of hotel when you move, visa stamping expenses, ie taxi expenses from airport to a new work location, attorney expenses etc... Your employer can give you a gift card for being a wonderful employee.

Lets keep this discussion on, it might get interesting.
 
Now, if a person has relocated to a client site (true for most consultants on H1Bs), meaning, they don't have a home base elsewhere, are they per diem eligible?
 
IRS guideline to employers

avi101 said:
It is seems many desi companies use per-diem as an incentive for higher pay. Is it legal?

e.g.
if the net pay for the consultant is say $60/hr (billing rate - company margin - company taxes), they say that they would pay 20/hr out of this as per diem (even if the consultant is not travelling much\too far).
Click to expand...
Here is what Employer's Tax Guide from IRS says:
Per diem or other fixed allowance:
You may reimburse your employees by travel days, miles or some other fixed allowance. In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. The 2006 standard mileage rate for auto expenses is 44.5 cents per mile. The government per diem rates for meals and lodging in the continental US are listed in Publication 1542, Per Diem Rates. Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven)
If the per diem or allowance paid exceeds the amounts specified, you must report the excess amount as wages. This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. Show the amount equal to the specified amount (for example, the nontaxable portion) in box 12 of Form W-2 using code L
 
Hi Dallas,
Does the following items come under non taxable allowances
Moving expenses
Temporary accomodation at project location
Rental car till own car is transported
Visa stamping expenses
Airport parking
Immigration lawyer expenses
 
Please consult your CPA

chanduv23 said:
Hi Dallas,
Does the following items come under non taxable allowances
Moving expenses
Temporary accomodation at project location
Rental car till own car is transported
Visa stamping expenses
Airport parking
Immigration lawyer expenses
Click to expand...
Sorry. I am not qualified to give you advice. Please consult your CPA.
However I know the following items are listed in Employers' tax guide under Nontaxable fringe benefits:
Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass and qualified parking)
Qualified moving expenses reimbursement

Regarding lodging: The value of lodging is not subject to income tax withholding and social security, Medicare and FUTA taxes, if the lodging is furnished for the employer's convenience, on the employer's premises and as a condition of employment.
 
Chanduv..
Moving expenses can be itemised and deducted. But there is a minimum distance criteria for that. This includes temporary accomodation and car rental. i am not sure if there is a max number of days limit on these.


chanduv23 said:
Hi Dallas,
Does the following items come under non taxable allowances
Moving expenses
Temporary accomodation at project location
Rental car till own car is transported
Visa stamping expenses
Airport parking
Immigration lawyer expenses
Click to expand...
 
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