Adding to our last blog post, Employee Expense Reimbursements – Common Problems & Best Practices, below is an explanation of how to best handle employee expense reimbursements when it comes to meal per diems vs. exact expense reimbursements.
Assume that an employee traveling on government-approved business spends $17.23 for breakfast, $4.50 for mid-morning coffee, $22.78 for lunch, $7.80 for a mid-afternoon snack and $43.50 for dinner. For governments that don’t use meal per diems, all expenses and related receipts will need to be submitted by the employee on the expense report (or entered into expense reimbursement software). Once submitted, the Finance Department will need to examine each amount and related receipt to ensure the employee gets reimbursed for the correct amount.
In order to make expense reimbursement both simpler for administrative purposes, as well as clearer to follow, many governments use a “meal per diem” policy. Per diem (meaning “for each day”) pays the employee a specific amount per day that they are expected or allowed to use and not to go over.
IRS allowed meal per diem rates are set by the General Services Administration for each U.S. city. Follow this link to find the IRS allowed rates.
The “per diem” approach works best, especially when it comes to meals, for the following reasons:
If your government is not already using meal per diems, consider making this change. It will make processing employee reimbursement easier for employees as well as for the Finance Department.
For more specific questions related to employee expense reimbursement, please feel free to reach out to Kevin directly at:
Kevin Harper, CPA
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