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Exploring Daily Allowances

Objective

After completing this lesson, you will be able to learn about daily allowances.

Daily Allowance Rates

A screenshot of the Travel Allowance Options configuration page in Concur Expense. At the top, the title Travel Allowance Options is shown, accompanied by a subtitle stating, This is where you define how Concur will track travel allowances. Below this, there is a dropdown menu for selecting the country, which is currently set to United States. To the right of this dropdown are buttons for Save, Cancel, Activate, and Deactivate, with the Deactivate button highlighted in blue. Under the section Choose how your company uses travel allowances, there are two dropdown menus: one labeled Lodging and the other labeled Meals. Both dropdowns are set to Daily Allowance. The Lodging and Meals dropdown selections are highlighted in yellow for emphasis.

Understanding Daily Allowance Rates

Daily allowances are a common method for reimbursing employees for travel expenses. These allowances cover meals and incidental expenses, and the rates can vary based on location and duration of travel. For instance, the U.S. General Services Administration (GSA) publishes specific rates for different regions, which are updated periodically to reflect seasonal changes.

Calculating Daily Allowance

When calculating daily allowances, it is important to consider the rules for partial days. For trips lasting more than 12 hours but less than 24 hours, employees typically receive 75% of the daily rate.

For trips spanning multiple days, the first and last days are also calculated at 75% of the daily rate, while full days are reimbursed at 100%. This ensures that employees are fairly compensated for their travel-related expenses.

Reimbursement Policies

Employees must be aware of the specific rates and allowances applicable to their travel expenses, which can vary based on location and duration of travel. For instance, the U.S. General Services Administration (GSA) publishes different rates for Continental U.S. (CONUS) and Outside Continental U.S. (OCONUS) locations, with adjustments for peak and off-peak seasons.

Employees must accurately document their expenses and understand the distinction between reimbursable and non-reimbursable costs. Lodging taxes, for example, are included in foreign allowances but must be itemized separately for domestic expenses. Additionally, companies may reimburse employees for actual expenses up to a certain limit, with any excess potentially being categorized as overhead.

Clear communication and adherence to these policies ensure that both employees and the organization remain compliant with financial regulations.

Partial Daily Allowances

Managing Partial Day Allowances

Trips less than 12 hours

When managing travel allowances, handling partial days requires special consideration. According to US/GSA rules, if a trip lasts less than 12 hours, no travel allowance is provided.

This ensures that allowances are fairly distributed based on the actual time spent traveling.

Trips between 12 and 24 hours

For trips that are more than 12 hours but less than 24 hours, travelers receive 75% of the applicable Meals and Incidental Expenses (M&IE) rate.

Companies must accurately track these partial day allowances to ensure compliance with federal regulations and proper reimbursement for employees.

Multiple day trips

For trips spanning multiple days, the first and last days are also calculated at 75% of the M&IE rate.

This prorated approach ensures that allowances are fairly distributed based on the actual time spent traveling.

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