Do you send employees on temporary assignments but don’t want to be bothered with collecting receipts or reimbursing for receipted amounts for housing or meals? Are you aware that there are tables available containing amounts that can be given in lieu of receipts?
Last Monday, the IRS provided its annual list of adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code for specific locations for 2014. (Notice 2014-29) These adjustments are made based on the geographic differences in housing costs relative to housing costs in the USA.
Section 911(a) allows a qualified individual to elect to exclude from their foreign earned income certain housing cost amounts of such individuals. Section 911(c)(1) provides the formula for determining the excludable amount of the individual’s foreign housing cost. Section 911(c)(2)(A) limits the housing expenses taken into account. A qualified individual whose entire taxable year is within the applicable period is limited to maximum housing expenses of $29,760 in 2014.
So what does that mean for companies and their employees?
For employees on temp assignments where most expenses are non-taxable, this just gives an option to companies if they don’t want to collect receipts or reimburse for expenses. Companies can instead just give a per diem up to the amounts listed in the tables, and let the transferee do as they please.
Within Section 3, the IRS lists hundreds of foreign locations in which they are increasing the limitations of housing expenses. This notice also allows taxpayers who incurred housing expenses in 2013 to elect to apply the 2014 limitation amount to the 2013 year.
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