Currently, we pay our church staff $35 per day per diem for meals when they travel to attend training out of town. We have found that they sometimes eat very cheaply to save the money and pocket the difference. Do we have the option to reimburse them for the actual cost of meals using receipts they provide? And what are the limits for breakfast, lunch, and dinner?
Yes, you can absolutely reimburse for exact expenses.
1. The lowest per diem used by the IRS is $11 for breakfast, $12 for lunch, and $23 for dinner. The highest is $17 for breakfast, $18 for lunch, and $34 for dinner. The IRS bases the per diem on the area where the employee is traveling, and when setting your own limits, we recommend you do the same.
2. If you set a max-per-meal, employees may stop spending frugally and start spending every dime they are allowed.
3. The result of #2 is that you could end up spending the same amount of money while substantially adding to your paperwork.
This is definitely a cost benefit analysis situation. If you’re really bothered by employees pocketing the extra money, by all means go the exact expense route. But realize that given the extra overhead to deal with the receipts and expense reports, it may not be financially worth it.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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