What's a nontaxable per diem?
Nontaxable per diem amounts are fixed, nontaxable daily allowances to pay for lodging, meals, and incidental expenses incurred during travel. Typically, nontaxable per diem is used in industries where travel is a required part of the job, such as truck drivers. Unlike expense reimbursements, nontaxable per diem amounts are reported on W-2 forms.
To set up a Nontaxable Per Diem pay type for an employee:
- Go to the Employees tab.
- Click an employee's name.
- On the employee's overview page, look for the Pay section and click Edit.
- Scroll down to the What additional ways do you pay? section and click to select the Nontaxable Per Diem checkbox.
- Optional: Enter a default amount to be paid each paycheck. You can always change the amount when you create the paycheck.
- Click OK.
Next time you create a paycheck for the employee, the Nontaxable Per Diem pay item appears. Simply enter the total amount for the pay period and our payroll service includes the amount on the employee's paycheck.