Income Tax on per Diem (Non Accountable plan)
A per diem payment is a cost of doing business for the company, not for you. They can claim it (probably); you can't (definitely).
"Short answer: Yes. For Federal income tax purposes, you are taxed on your total income, adding up positives and negatives. If business A made, say, $100,000 while business B lost $20,000, then your total income is $80,000, and that's what you'll be taxed on. As @littleadv says, of course any business losses you claim must qualify as business losses under IRS rules. And yes, there are special rules about losses that the IRS considers ""passive"". If you have wage income in addition to business income, business losses don't offset wage income for social security and medicare tax purposes. You can't get a refund of the social security tax deducted from your paycheck. I don't know if this is relevant to you, but: If you have businesses in different states, each is taxed by that state. For example I have two tiny side businesses, one in Michigan and one in Ohio. Last year the Michigan business made money while the Ohio business lost money. So my federal income was Michigan minus Ohio. My Ohio income was negative so I owed no Ohio income tax. But I couldn't subtract my Ohio losses from my Michigan income for Michigan income tax purposes. Thus, having, say, $10,000 income in Michigan and $10,000 in Ohio would result in lower taxes than $30,000 income in Michigan and a $10,000 loss in Ohio, even though the total income in both cases is the same. And this would be true even if the tax rates in both states were identical." The IRS defines income quite specifically. On the topic What is Taxable and Nontaxable Income, they note: You can receive income in the form of money, property, or services. This section discusses many kinds of income that are taxable or nontaxable. It includes discussions on employee wages and fringe benefits, and income from bartering, partnerships, S corporations, and royalties.  Bartering, or giving someone wages (or similar) in something other than currency (or some other specifically defined things, like fringe benefits), is taxed at fair market value: Bartering Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. For additional information, Refer to Tax Topic 420 - Bartering Income and Barter Exchanges. Bartering is more specifically covered in Topic 420 - Bartering Income: You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X (PDF), Amended U.S. Individual Income Tax Return. Refer to Topic 308 for information on filing an amended return. More details about income in general beyond the above articles is available in Publication 525, Taxable and Nontaxable Income.  It goes into great detail about different kinds of income. In your example, you'd have to calculate the fair market value of an avocado, and then determine how much cash-equivalent you were paid in.  The IRS wouldn't necessarily tell you what that value was; you'd calculate it based on something you feel you could justify to them afterwards.  The way I'd do it would be to write down the price of avocados at each pay period, and apply a dollar-cost-averaging type method to determine the total pay's fair value.   While the avocado example is of course largely absurd, the advent of bitcoins has made this much more relevant.  Publication 525 has this to say about virtual currency: Virtual Currency.   If your employer gives you virtual currency (such as Bitcoin) as payment for your services, you must include the fair market value of the currency in your income. The fair market value of virtual currency (such as Bitcoin) paid as wages is subject to federal income tax withholding, Federal Insurance Contribution Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2, Wage and Tax Statement. Gold would be fundamentally similar - although I am not sure it's legal to pay someone in gold; assuming it were, though, its fair market value would be again the definition of income.  Similarly, if you're paid in another country's currency, the US dollar equivalent of that is what you'll pay taxes on, at the fair market value of that currency in US dollars. If the employer provides housing to the employee, the employer has to identify whether it is taxable or not. If it is - the amounts would be added to the taxable income on your W2. All the withholding and FICA tax calculations will be performed based on that taxable income. If the employer fails to do that, and you get audited, you can be left on the hook for the unpaid taxes on the unreported income. In some cases, employee housing is a non-taxable fringe benefit, in others it is taxable. Your tax adviser will help identify which case applies to you. After you added in a comment that you're trying to see if you should be asking your boss to pay your personal expenses vs. giving you a raise - as I said in the comments, your personal expenses are not deductible neither for you nor for anyone else. If your boss pays your rent instead of a raise - its taxable income for you. "Yes, the penalty is the tax you pay on it again when you withdraw the money. The withdrawal of the excess contribution is taxed as your wages (but no penalty). Excess contribution cannot be added to the basis or considered ""after-tax"" (hence the double taxation). Note that allowing you to keep the excess contribution in the plan may lead to disqualifying the plan, so it is likely that the plan administrator will force you to remove the excess contribution if they become aware of it. Otherwise you may end up forcing early 401(k) withdrawal on all of your co-workers. More on this IRS web page. And this one." "I've been in a very similar situation to yours in the past.  Since the company is reimbursing you at a flat rate (I assume you don't need to provide documentation/receipts in order to be paid the per diem), it's not directly connected to the $90 in expenses that you mention.  Unless they were taking taxes out that would need to be reimbursed, the separate category for Assets:Reimbursable:Gotham City serves no real purpose, other than to categorize the expenses. Since there is no direct relationship between your expenses and the reimbursement, I would list them as completely separate transactions: Later, if you needed to locate all of the associated expenses with the Gotham trip, gnucash lets you search on memo text for ""Gotham"" and will display all of the related transactions.  This is a lot cleaner than having to determine what piece of the per diem goes to which expenses, or having to create a new Asset account every time you go on a trip." "On thing the questioner should do is review the Summary Plan Description (SPD) for the 401(k) plan.  This MAY have details on any plan imposed limits on salary deferrals.  If the SPD does not have sufficient detail, the questioner should request a complete copy of current plan document and then review this with someone who knows how to read plan documents. The document for a 401(k) plan CAN specify a maximum percentage of compensation that a participant in the 401(k) plan can defer REGARDLESS of the maximum dollar deferral limit in Internal Revenue Code Section 402(g).  For example, the document for a 401(k) plan can provide that participants can elect to defer any amount of their compensation (salary) BUT not to exceed ten percent (10%).  Thus, someone whose salary is $50,000 per year will effectively be limited to deferring, at most, $5,000.  Someone making $150,000 will effectively be limited to deferring, at most, $15,000.  This is true regardless of the fact that the 2013 dollar limit on salary deferrals is $17,500.  This is also true regardless of whether or not a participant may want to defer more than ten percent (10%) of compensation. This ""plan imposed"" limit on salary deferral contributions is permissible assuming it is applied in a nondiscriminatory manner.  This plan imposed limit is entirely separate from any other rules or restrictions on salary deferral amounts that might be as a result of things like the average deferral percentage test." "There is no penalty for foreigners but rather a 30% mandatory income tax withholding from distributions from 401(k) plans. You will ""get it back"" when you file the income tax return for the year and calculate your actual tax liability (including any penalties for a  premature distribution from the 401(k) plan). You are, of course, a US citizen and not a foreigner, and thus are what the IRS calls a US person (which includes not just US citizens but permanent immigrants to the US as well as some temporary visa holders), but it is entirely possible that your 401(k) plan does not know this explicitly. This IRS web page tells 401(k) plan administrators Who can I presume is a US person?   A retirement plan distribution is presumed to be made to a U.S. person only if the withholding agent: A payment that does not meet these rules is presumed to be made to a foreign person.  Your SSN is presumably on file with the 401(k) plan administrator, but perhaps you are retired into a country that does not have an income tax treaty with the US and that's the mailing address that is on file with your 401(k) plan administrator? If so, the 401(k) administrator is merely following the rules and not presuming that you are a US person. So, how can you get around this non-presumption? The IRS document cited above (and the links therein) say that if the 401(k) plan has on file a W-9 form that you submitted to them, and the W-9 form includes your SSN, then the 401(k) plan has valid documentation to associate the distribution as being made to a US person, that is, the 401(k) plan does not need to make any presumptions; that you are a US person has been proved beyond reasonable doubt. So, to answer your question ""Will I be penalized when I later start a regular monthly withdrawal from my 401(k)?"" Yes, you will likely have mandatory 30% income tax withholding on your regular 401(k) distributions unless you have established that you are   a US person to your 401(k) plan by submitting a W-9 form to them." It's legal. In fact, they are required to do this, assuming you are in fact a HCE (highly compensated employee) to avoid getting in trouble with the IRS. I'm guessing they don't provide documentation for the same reason they don't explain to you explicitly what the income thresholds are for social security taxes, etc - that's a job for your personal accountant. Here's the definition of a HCE:  An individual who: Owned more than 5% of the interest in the business at any time during   the year or the preceding year, regardless of how much compensation   that person earned or received, or For the preceding year, received   compensation from the business of more than $115,000 (if the preceding   year is 2014; $120,000 if the preceding year is 2015, 2016 or 2017),   and, if the employer so chooses, was in the top 20% of employees when   ranked by compensation. There are rules the restrict distributions from plans like 401ks. For example, treasury reg 1.401a(4)-5(b)(3) says that a plan cannot make a distribution to a HCE if that payment reduces the asset value of the plan to below 110% of the value of the plan's current liabilities. So, after taking account all distributions to be made to HCEs and the asset value of the plan, everyone likely gets proportionally reduced so that they don't run afoul of this rule. There are workarounds for this. But, these are options that the plan administrators may take, not you. I suppose if you were still employed there and at a high enough level, a company accountant would have discussed these options with you. Note, there's a chance there's some other limitation on HCEs that I'm missing which applies to your specific situation. Your best bet, to understand, is simply ask. Your money is still there, you just can't get it all this year. There is no such thing as double taxation. If you pay tax in the US, you CAN claim tax credits from India tax authority.  For example, if you pay 100 tax in USA and your tax liability in India is 200, then you will only pay 100 (200 India tax liability minus 100 tax credits on foreign tax paid in the USA).  This is always true and not depending on any treaty. If there is a treaty, the tax rate in the United States is set on the treaty and you CAN claim that final tax rate based upon that treaty.  If you operate an LLC, and the income is NOT derived from United States and you have no ties with the US and that LLC is register to a foreign person (not company but a real human) then you will not have to submit tax return in the US... I advice you to read this: http://www.irs.gov/businesses/small/article/0,,id=98277,00.html "I think you may have a significant misunderstanding here.  You have been renting your property out for two years, now.  There is no special ""roommate"" clause in the tax code; roommates are renters, and the rent they pay is rental income.  (If they were roommates in a property you both rented from a third party, that would be different.) See publication 527, chapter 4 for more details on the subject (search on ""Renting Part of Property"").  You should be: You may also consider ""Not renting for profit"" section, which may be closer to what you're actually thinking - of changing from ""Renting not for profit"" to ""Renting for profit"".  Not rented for profit means you can report on your 1040 as opposed to filing Schedule E, but it does mean you have to actually not make a profit (and remember, some of the money that goes to paying the mortgage is not deductible on this side of things since it's your property and you'll get that money back, presumably, when you sell it). If that is what you're asking about, it sounds like it's just a matter of money.  Are you going to start making money?  Or, are you going to start making enough significant upgrades/etc. to justify the tax deduction?  You should consider the actual, specific numbers carefully, probably with the help of a CPA who is familiar with this sort of situation, and then make the decision that gives you the best outcome (keeping in mind that there may be long-term impacts of switching from not-for-profit to for-profit rental treatment)." "Some of the 45,000 might be taxable. The question is how was the stipend determined. Was it based on the days away? The mile driven? The cities you worked in? The IRS has guidelines regarding what is taxable in  IRS Pub 15 Per diem or other fixed allowance.  You may reimburse your employees by travel days, miles, or some other   fixed allowance under the applicable revenue procedure. In these   cases, your employee is considered to have accounted to you if your   reimbursement doesn't exceed rates established by the Federal   Government. The 2015 standard mileage rate for auto expenses was 57.5   cents per mile. The rate for 2016 is 54 cents per mile. The government per diem rates for meals and lodging in the continental   United States can be found by visiting the U.S. General Services   Administration website at www.GSA.gov and entering ""per diem rates"" in   the search box. Other than the amount of these expenses, your   employees' business expenses must be substantiated (for example, the   business purpose of the travel or the number of business miles   driven). For information on substantiation methods, see Pub. 463. If the per diem or allowance paid exceeds the amounts substantiated,   you must report the excess amount as wages. This excess amount is   subject to income tax with-holding and payment of social security,   Medicare, and FUTA taxes. Show the amount equal to the substantiated   amount (for example, the nontaxable portion) in box 12 of Form W-2   using code “L""" Sorry, it appears not, according to http://www.nysscpa.org/cpajournal/2008/508/perspectives/p12.htm: ...and the election to make Roth 401(k) contributions (these are after-tax contributions) is irrevocable.  Fairmark says the same thing. PS, don't complain too loudly, given the reason for the problem. :) The Cayman Islands has an income tax enacted, it is just currently 0%.  It raises revenues from its tourism, import duties, and business registration.  It is part of the UK commonwealth and therefore enjoys the military protection of that federation, but doesn't have to spend on it. But unlike the US, the UK does not have an umbrella federal income tax on its overseas territories, so the Cayman Islands doesn't have to pass that down to its citizens nor do its citizens/residents have to be encumbered by one. It was not taxed by the King when it was first incorporated (hm, might need to fact check that). They also didn't go to war with the king over some small tax, so they got treated differently than some other North American colonies you might think of. The Cayman Islands is not the only government that raises revenues this way. Delaware also has a 0% income tax and raises the majority of its revenues on business registration (and perpetual franchise taxes on those businesses), allowing it to spare its citizens from passive income taxes. But unlike a US state, a citizen or business in a UK overseas territory does not have federal regulatory overhead, making it more attractive as a worldwide financial center. The argument seems to derive from the fact that state law bars cities from taxing net income. Hence the city is arguing it doesn't apply to gross income. Of course the city would also have to argue that income isn’t property. I don't think it's going to work out for them. You will not necessarily incur a penalty.  You can potentially use the Annualized Income Installment method, which allows you to compute the tax due for each quarter based on income actually earned up to that point in the year.  See Publication 505, in particular Worksheet 2-9.  Form 2210 is also relevant as that is the form you will use when actually calculating whether you owe a penalty after the year is over. On my reading of Form 2210, if you had literally zero income during the first quarter, you won't be expected to make an estimated tax payment for that quarter (as long as you properly follow the Annualized Income Installment method for future quarters).  However, you should go through the calculations yourself to see what the situation is with your actual numbers.