You cannot deduct commuting costs so make sure you understand what is considered commuting – See the image furnished by the IRS below.

Reimbursements are part of an Accountable Plan which requires:

Business Connection: Proof of business necessity

Substantiation: Original receipts, mileage log, reimbursement request form.

Return of Excess Amounts: Return of unused advances.

IRS Info

Non-Accountable Plans are defined as:

Fixed daily or monthly amounts

No documentation of miles or expenses

Any payment to employee that does not meet the Accountable Plan requirements i.e. is considered a Non-Accountable Plan must be taxed as wages. Employee will need to substantiate and deduct on personal return.

IRS Info

What about per diem?

Considered reimbursement only if employees return an expense report in a reasonable period.

Per Diem FAQs