Individuals who pay for lodging expenses while away from home on business can deduct these lodging expenses only if they are substantiated in full (record of time, place, amount, and business purpose, plus paid bills or receipts). The expenses can’t be substantiated using the lodging component of the federal per-diem rate.
IRS Revenue Procedures don’t allow employees or self-employed individuals to use the federal lodging per diem rate to substantiate deductions for lodging expenses. For example, a taxpayer who is away from home overnight on business for three days cannot deduct $525 for lodging (assuming a federal lodging rate of $175 x 3) on the strength of simplified substantiation (written record of time, place, and business purpose). The lodging deduction can only be claimed as a deduction if the expense is documented. Examples of documentary evidence include receipts, paid bills or similar evidence.