10342: 1040 - Per Diem Allowance

​Beginning in 2018, Form 2106 is only used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. See the video Form 2106 - Employee Business Expenses

Employee expenses and reimbursement are entered on screen 2106. Any excess of reimbursements over expenses flows to Form 1040, line 7 and displays the literal F2106. Note 422 is produced in view mode when this occurs.

A per diem allowance is "a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business." Publication 463, Travel, Entertainment, Gift, and Car Expenses, p. 30.

Publication 463 and the Instructions for Form 2106 describe employee expenses and per diem reimbursement. Whether an employer reports reimbursement on the employee's W-2 depends on whether the employee is reimbursed under an accountable or a non-accountable plan.

Generally,

• Per diem paid under an accountable plan is not reported as income on line 1 of the employee's W-2. The employee would report both deductible expenses and employer reimbursement (the per diem allowance) on Form 2106, Employee Business Expense.
• Per diem paid under a non-accountable plan is reported as income on line 1 of the employee's W-2. The employee would report only deductible expenses on Form 2106.