travel Archives - The Free Financial Advisor

How To Ask for Reimbursement of Travel Expenses

March 3, 2021 by Jacob Sensiba Leave a Comment

At this point in time, business travel is less common than it used to be. I have a hunch that it will never return to pre-pandemic levels, as employers found it easier and less expensive to accomplish this through Zoom. It’s still important to know the ins and outs. Today we will cover how to ask for reimbursement of travel expenses.

What are travel expenses?

Travel expenses occur when an employee travels for business purposes. A business trip can include conferences, business meetings, client meetings, training, job fairs, etc. One thing about travel expenses, is you need to be sure you’re getting the best jet card program. You want to get as many points or cash back rewards as possible.

Travel expenses include lodging, food, rental car, tips for servers and bellhops, etc. Most organizations that require employees to travel on a regular basis have policies in place.

If an employee is traveling for an extended period of time or is at a particular location for an extended stay, the business may also include reimbursement to pay for your family to visit.

When entertaining a client or a business partner, there are limits on entertainment expense reimbursement, so make sure you check your company’s guidelines so you don’t breach that threshold.

How do employees pay for travel expenses?

Company credit cards, personal credit/debit cards, cash, or allowances given by the employer.

How to ask for reimbursement of travel expenses

If the corporate policies are unclear about the process, write a letter first. Before you go on a trip or take a client out for lunch, request the payment of the expense, or at least ask for some information about what is covered, what isn’t, and what the limits are. Establishing communication upfront is very important.

Per diem, aka travel allowance or an expense account, is recognized by the IRS. Per their guidelines, your expense report is due to your employer (usually HR) within 60 days. The report should include dates, location(s), and receipts.

If you have any allowances or advancements that haven’t been used or can’t be justified as a business expense, then you must return that to your employer. If you don’t return it, that money can be classified as taxable income.

Conclusion

As I said in the opening, I don’t believe business travel will return to pre-pandemic levels, but it’s important to know what travel expenses are and how to ask for reimbursement of travel expenses.

Review your company’s business travel policy for more information, and if your company doesn’t have one, speak to them about what’s covered, what’s not covered, and any limitations.

When are Per Diem Payments Taxable?

September 2, 2020 by Jacob Sensiba Leave a Comment

Per diem payments are used when businesses have employees that travel. These payments are designed to relieve the employee from certain costs associated with traveling. Particularly meals and incidentals (ground travel, laundry, room service, etc.), and lodging.

This is great for both the business and the employee, but there are certain situations when per diem payments are taxable. In this article, we’ll explore exactly when an employee will pay per diem tax.

Two types

There are two types of per diem payments, meal-only, and meal and lodging. The names imply their use. One pays for meals, the other pays for meals and lodging.

It’s important that we specify the meals must be “non-entertainment related” meals.

Stipulations

As with many parts within the tax code, per diem rules are very specific. Meals and lodging have different rates.

Also, different cities have different rates. These differences are typically relegated to “big cities” and “small cities”, with bigger cities getting the larger rates. This is referred to as the high-low method. Businesses may also make payments based on the state in which you travel.

The per diem payments must be equal to or less than the federal allowable limit (depending on what method is selected). The employee is responsible for filing an expense report within 60 days. The expense report needs to include, date and location of the trip, purpose of the trip, and lodging receipts (if the meal-only option is selected).

You’re not allowed to “transfer credits”. What’s meant by this is if you use less on your lodging than is allotted, you can’t use the excess on food, or vice versa.

Tax Consequences

As I mentioned in the introduction, per diem payments can have tax consequences.

If per diem payments over the limit are taxable on the employee’s wages
If an expense report isn’t filed, or the filed expense report doesn’t include the required information, those per diem payments become taxable to the employee.
If the employer allows you, the employee, to keep whatever you don’t spend.

If you travel for business and receive per diem payments, just make sure you keep good records, and you hang onto your receipts. It’s better to have too much information than not enough.

5 Surprising Tips to Supersize Your Family Vacation

May 17, 2013 by Stan Poores 18 Comments

Memorial Day is right around the corner. Have you started planning your summer vacations yet?

Do you take a family vacation every year? Where do you typically go and how much does it cost you? What if I told you that you that for the same amount of money (or less), I could teach you how to go somewhere nicer or do more at that vacation spot you love. Yes, it is possible. Let’s check out the list!

My 5 “Not So Obvious” Family Vacation Tips

1) Stop Planning – I know, it almost sounds counterintuitive to what you should do to save money on your vacation. Typically, you’re taught to plan where you’re going in advance because if you wait until the last minute, everything will be much more expensive. While this is still the case for some items, there are benefits to waiting before choosing your exact destination. Websites such as TravelZoo or CheapCaribbean offer last minute deals on all-inclusive getaways and cruises all over the world. I once saw a weeklong trip to Aruba for only $800, which included the flight, the hotel stay, some events, and all of the food! Sometimes it pays to wait.

2) Stay Connected to Your Friends – With the help of Facebook, it’s pretty easy to stay connected to your friends today. And, since our world is becoming so globalized, your friends will most likely move to all corners of the world. While this may be tough to deal with at first (since you no longer get to see your friends every day), it provides a great reason to visit a new area on the globe and to do it for cheap (since you’ll be staying with your friend)! Just offer to pay for their food for the week and it’s suddenly a win-win situation.

3) Buy Groceries, Not Fine Dining – The purpose of your vacation is most likely to explore a new area that you’ve never experienced, not to eat at a chain restaurant that is prevalent in your own hometown. With a week-long vacation, it is much cheaper to go to the grocery store at the beginning of the trip than to eat out for every meal. This small tip could very easily save you $200-$400!

4) Learn From the Locals – No matter where you’re vacationing to, there will be “must see” attractions that are sent your way which aren’t really that great of an experience. Unfortunately, you won’t know this until your money is already spent! Do your due-diligence on this one and try to learn from the locals. Find a blog about local fun or connect with a friend or a friend that can give you some quick tips on what to see. Often times, the best attractions are the ones that are free!

5) Explore, Then Do – For many of us, when we go on vacation we feel like we have to hurry up and do as much as we can, but this is no way to vacation at all. Once you finally get home, you’re more exhausted than when you left, and you’re way poorer than you expected too! Instead of charging forward and doing a bunch of activities that are presented to you that first day, take it easy and go for a stroll around the city. Make a mental note of what you’d like to do and see. Not only will you enjoy yourself more, but you’ll have save some of that money in your pocket.

How do you save money on family vacations without skimping on fun? Let’s share notes in the comments below….

Photo: Stevendepolo

5 Methods I’m Contemplating to Avoid American Airlines this Fall

October 2, 2012 by Average Joe 24 Comments

Just my luck.

Reliable news organizations such as the Wall Street Journal and CBS News are asking an important question: Is American Airlines a trusted travel source this holiday season? According to the CBS piece, American Airlines cancelled over 300 flights two weeks ago, purportedly due to disgruntled employees. Yesterday’s news about loose seats makes me even more nervous. Whether this is caused by staff sabotage or oversights due to overworked and unhappy employees is irrelevant to me; I think I’ll look elsewhere.

That’s where my trouble begins.

Each November and December we make the trek twice (Thanksgiving and the December holiday season) halfway across the country to visit family in the Midwest.

For many, this is a no-brainer: take another airline. However, in our quest to live in small town America, we moved to Texarkana nearly four years ago. Guess how many airlines service our town?

You’ve got it: exactly one….American Airlines.

So, now I’ve created a list of (hopefully) inexpensive ways to avoid American Airlines. Here are our choices the way I see it:

1) While Shreveport (75 minutes away) offers me nothing exciting unless I’m headed to Vegas or Orlando, Little Rock (two hours) and Dallas (three hours) might give me some interesting options. Experts always recommend checking neighboring cities. In my case, Southwest flies into Little Rock. However, the Little Rock – Detroit trip has never been an inexpensive proposition for some reason. Dallas gives me plenty of possibilities, but between gas, parking and the six hours of combined travel time there-and-back, I’m almost a third of the way to my destination if I’d driven it.

2) So…I’ve scheduled alerts on Hotwire and Expedia to tell me if prices decline in Little Rock or Dallas. I’m not hopeful, but I like the fact that I can electronically monitor rates without having to flip through several websites each day.

3) I’ve also begun the search for discount options. I could try to sell our AA miles and buy miles in other programs, but this is fraught with risk (and I’d still have to drive to Shreveport, Little Rock or Dallas to catch a flight). The last thing I want is to end up with no ticket because I violated the airline’s terms of service. It isn’t against the TOS to swap miles with family (I transfer my AA miles to them while they give me an equivalent on another airline). While there have been times where giving miles in an unstable airline sounded like fun, I can’t do this in good faith to my family.

4) We could drive or take the train. Hold on. I just wrote, “Take the train!” Just a minute while I catch my breath…man, that was funny. I COULD take Amtrak if I wanted to pay a bundle AND arrive just after my retirement date.

Seriously, though, in the past we’ve driven, but that kills two days from the trip, instead of a few hours to fly. The first day we arrive and the initial day back home I’m still tired from all that time in the car. As in the past, if we stick with hotel deals (like on Hotels.com, use gasoline smartphone apps and the awesome Wasi social driving app, we can make it there in 15 hours.

5) For now, I’ve set an alert in Google for “American Airlines” news to follow the situation closely. I have maybe two weeks before I need to pull the trigger on this decision. Hopefully conditions improve and I can just schedule a flight out of Texarkana.

Which would you choose? Any ideas I’ve forgotten?