IRS Publication 463 is the official guide to travel, gift, and car expenses. For government employees and military members on Temporary Duty (TDY), this publication is critical to understanding how reimbursements are handled for tax purposes. While agencies issue their own travel regulations, the IRS provides the tax framework that determines whether reimbursements are taxable or non-taxable.

What is IRS Publication 463

IRS Publication 463 explains which travel expenses can be deducted or reimbursed without becoming taxable income. It covers lodging, meals, transportation, and incidental expenses. For TDY travelers, the rules ensure that allowances like per diem remain non-taxable when they follow proper procedures.

Why it matters for TDY travel

Government employees receive per diem and lodging reimbursements under agency rules such as the Joint Travel Regulations (JTR) or the Federal Travel Regulation (FTR). IRS Publication 463 establishes the tax standard that determines whether those reimbursements are excluded from income. If documentation is missing or rules are not followed, reimbursements could be treated as taxable.

Accountable plans and TDY

An accountable plan is the IRS framework that keeps reimbursements tax-free. To qualify, three conditions must be met:

  • Expenses must have a business connection
  • Receipts and documentation must be submitted in a reasonable time
  • Any excess reimbursements must be returned

TDY travel falls under an accountable plan as long as employees provide proper receipts and stay within authorized per diem limits.

Examples from TDY travel

  • Lodging: Requires receipts that show dates, rates, and proof of payment
  • M&IE: Covered as a daily allowance without receipts, but reduced if meals are provided
  • Transportation: Covered when directly tied to TDY orders

Common mistakes under IRS rules

  • Failing to provide receipts for lodging or large expenses
  • Claiming personal expenses under per diem allowances
  • Not returning excess reimbursements when actual costs are lower
  • Mixing personal and official travel costs on the same receipt

How to stay compliant

  • Keep every lodging receipt itemized and clear
  • Submit vouchers promptly to meet the reasonable time requirement
  • Track when meals are provided and adjust M&IE claims
  • Separate personal expenses from official TDY charges

The bottom line

IRS Publication 463 is the tax foundation behind TDY travel reimbursements. By following its guidance, government employees and military members can ensure their per diem and lodging remain non-taxable and fully compliant. Understanding these rules makes it easier to avoid costly mistakes and enjoy a smoother assignment.

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