Newsletter

Rates & Numbers

Prime Rate 4.25% (effective 11/7/2002)

Key Phone Numbers:

IRS forms & publications 800-829-3676

IRS bulletin board (requires modem) 304-264-7070

Annual Rates: 2002 2003

Soc. Sec / Medicare Rates 6.20%/1.45% 6.20%/1.45%

Social security wage limit $84,900 $87,000

Medicare wage limit Unlimited Unlimited

FUTA taxable wage base $7,000 $7,000

FUTA rate 6.2% 6.2%

FUTA Maximum credit 5.4% 5.4%

Minimum FUTA deposit rate 0.8% 0.8%

Business mileage rate (cents) * 36.5/mile 36/mile

Medical mileage rate (cents) 13.0/mile 12/mile

Charitable mileage rate (cents) 14/mile 14/mile

Relocation mileage rate (cents) 13.0/mile 12/mile

*Can be used only if the taxpayer owns/leases a passenger auto, van, pickup or panel truck not for hire that was not depreciated under ACRS,MACRS or Sec. 179 in earlier years.

This month's questions

Why would a company want to reimburse employees using a flat per diem instead of actual expenses?

Per diem allowances do not require receipts from employees traveling on business. The employee validates only the time, place and business purpose of the expenses.

What are the rules for using a flat nontaxable per diem?

A flat-rate per diem is nontaxable to employees if:

it is for ordinary and necessary business expenses incurred or reasonably expected to be incurred by an employee for lodging meals and incidentals while traveling away from home;
it is for expenses reasonably calculated not to exceed actual or expected expenses;
it is paid at the applicable federal per diem rate of other IRS approved rate or under a flat rate or stated schedule in account with normal business practices; and the method is used for the entire year