How do I get reimbursed from non-taxable income that was taxed?

My employer is taxing me on my per diems that I believe should not be taxed. I'm working and living 300+ miles from home temporarily and my allowances are in the taxable income portion of my paystub. I worked with another company and none of these allowances were taxed. I approached my company and they said they can't change it. How do I get reimbursed from the taxes that I never should have paid?

Public Comments

1. Is it a small company?
2. In this case you'll have to claim your expenses on Form 2106. The totals flow to the Miscellaneous Deductions section of Schedule A, subject to a 2% AGI limitation. If the total of your itemized deductions exceeds your Standard Deduction, then you get some benefit from doing this. If they don't exceed the Standard Deduction then you won't get any benefit. It sounds as if your employer is not operating an "Accountable Plan" for reimbursements. That's really too bad for you as if they did then you could avoid the hassle of having to pay taxes on the reimbursements. If they're not willing to change -- and it sounds as if they aren't -- your only option would be to find another job.
3. There are two methodologies. One is an accountable plan. They only reimburse you for the items you can deduct and it isn't added to your pay. They get the burden of record keeping and ensuring that you are eligible for the money. The other is a non-accountable plan. All of it is added to your pay and you get the obligation of record keeping. You report the meals on your tax return (only 50% is deductable) as well as logding (you must have actual receipts) using a form 2106, you lose 2% of your AGI and *if* you can itemize it can reduce your pay. If you have too much to deduct, it can trigger AMT.