ForumsTaxes and Payroll

When an employer reports an employee's earning at the end of the year on a W-2, per-diem is listed separate from taxable income, under 'Misc. non-taxable'.

Per diem is designed to cover the additional expenses you have of
living away from home - basically having two residences. The IRS sets
the maximum amount of per diem each year based on the location - for
instance, NYC has a higher rate than Peoria, Il. Per diem is supposed
to be paid on a daily basis, seven days a week, while you're at the
remote location. It is not supposed to be tied to your salary, number
of hours/days worked, etc. - just a flat daily rate. However, many
brokers will try to save money by saying it's only for those days you
work, or you get the full amount only if you work a full day, etc.

There are no ramifications if you later take a full time position
with the company. In fact, you can collect per diem even if you are a
full time employee, but are working away from home. You do not have to
be a contractor.

They can continue to pay the per diem as long as you're working for
them and maintaining two residences. However, if you do something like
rent your house out while you're gone, you're no longer maintaining two
residences, and no longer eligible for per diem.

Any tour of duty adding up to over 500 miles counts as a per diem.
You can claim up to the per diem limit without receipts. Anything over
this has to have records i.e. receipts. Note also that as long as you
keep a record that $xx.xx was spent on xx-xx-20xx, then you do NOT need
a receipt for any expense less than $75. A logbook and a pocket
calendar is a perfectly acceptable method of tracking these
"undocumented" (with a receipt, at least) expenses.

LUCKIEST