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Lodging Expense Requires Substantiation

On December 22, 2017, The Tax Cuts and Jobs Act was signed into law. The information in this article predates the tax reform legislation and may not apply to tax returns starting in the 2018 tax year. You may wish to speak to your tax advisor about the latest tax law. This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.

Lodging Expense Requires Substantiation
Individuals who pay for lodging expenses while away from home on business can deduct these lodging expenses only if they are substantiated in full (record of time, place, amount, and business purpose, plus paid bills or receipts). The expenses can't be substantiated using the lodging component of the federal per-diem rate.

IRS Revenue Procedures don't allow employees or self-employed individuals to use the federal lodging per diem rate to substantiate deductions for lodging expenses. For example, a taxpayer who is away from home overnight on business for three days cannot deduct $525 for lodging (assuming a federal lodging rate of $175 x 3) on the strength of simplified substantiation (written record of time, place, and business purpose). The lodging deduction can only be claimed as a deduction if the expense is documented. Examples of documentary evidence include receipts, paid bills or similar evidence.
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