I work for a small company, spending roughly 50% of my time on the road. The company has a reimbursement program for expenses that seems to be in compliance with IRS requirements. They have been adding the per diem allowance I receive for meals to the amount I'm paid as salary and then deducting federal and state taxes, FIRC, etc. from their total. Their claim is that I have to document all expenses to the IRS in order to get my money back when I file. I still don't see how this will allow me to get back my Social Security amounts, etc. I've always been under the impression that the purpose of the per diem allowance is to permit everybody to not have to track all these small receipts for minor expenses.

My understanding is that these per diem allowances are not taxable and therefore should not be added to the amount on which payroll deductions are figured.

Is this correct?

Where can I find a specific IRS statement showing that this is true and how per diem amounts should be handled when making payroll deductions?

Thank you.