Posted by JustANotary on 3/4/11 1:46pm
Msg #375125

Do you deduct meals? My IRS agent says no.

I am going through an IRS audit. I work as a traveling notary & I sometimes leave at 8 in the morning & get back at 7 in the evening. I am usually 30 miles from my house but sometimes 70 miles away. The IRS agent is saying I should not have taken ANY meal deductions for this. I was taking some of the standard deductions if I had lunch or snacks as I was out. Do you all deduct meals? Have you had to fight this in an audit before?

Reply by Linda_H/FL on 3/4/11 1:53pm
Msg #375126

No...I don't take a deduction for meals...

Per IRS publication 463 http://www.irs.gov/publications/p463/ch01.html#en_US_2010_publink100033781

"Meals
You can deduct the cost of meals in either of the following situations.

It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business.

The meal is business-related entertainment."

I don't think the travel we do in the course of normal business qualifies here...IMO it's like taking an allowance for your lunch break at work...

MHO

Reply by Pam/NM on 3/4/11 2:00pm
Msg #375128

Re: No...I don't take a deduction for meals...

If I meet a b/o at Sbux and buy a cuppa, I might deduct that, but otherwise, no. It's an audit-flag if nothing else.

Reply by jba/fl on 3/4/11 2:22pm
Msg #375133

Re: No...I don't take a deduction for meals...

"It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. "

Now that I'm old(er), does that mean if I fall asleep at a traffic light and end up pulling over for a nap....I can't deduct the meal needed to get me back up and running? Oh, my.....

Reply by Les_CO on 3/4/11 2:04pm
Msg #375130

If you’re making enough to deduct meals my hat’s off to you! I would think your meals would be only be deductable if it was a condition of the signing that you met the signers at lunch/dinner/breakfast/whatever, and ate with them while doing the signing. I’m far form a tax pro…JMO…( The Frito-Lay delivery guy may eat lunch far from home when working but I don’t think that’s a ‘business expense”) again I don’t have a clue, ask a CPA!

Reply by Lavergne Manuel on 3/4/11 2:18pm
Msg #375131

You can charge meals if you have to stay overnight and you have proof that you stayed overnight which if you stayed overnight in the course of business you can charge the cost of the motel or hotel also.

Reply by Linda Juenger on 3/4/11 2:24pm
Msg #375134

Hubby has his own business also, and we cannot deduct his breakfast/lunch out everyday either. He also uses "personal money" not business money to eat those meals. On occasion, he has stayed out on the road in his rig and those meals are paid for by the business and deducted in the business. Big difference.

Reply by MW/VA on 3/4/11 2:19pm
Msg #375132

No. It's one of the two areas that the IRS red flags for

incorrect deductions. The other area is claiming excessive mileage. You will end up paying interest & penalties, too. I'm sorry.

Reply by JustANotary on 3/4/11 2:24pm
Msg #375135

Re: No. It's one of the two areas that the IRS red flags for

She did not want to allow ANY mileage even though I have proof of all of the mileage I have driven. It sounds like we won that argument, but it amazed me that we had to argue this at all as I had all of the documentation. In an audit you are guilty until you prove you are innocent.

Reply by SharonH/OH on 3/4/11 2:42pm
Msg #375138

Re: No. It's one of the two areas that the IRS red flags for

Why did she not want to allow it? Was it a documentation issue, or did she not think we're entitled to mileage at all?

Reply by JustANotary on 3/4/11 3:04pm
Msg #375142

Re: No. It's one of the two areas that the IRS red flags for

She was not going to allow for it at all. My CPA held firm on that one as I had provided all of the mileage logs showing where I went each day, & also oil change receipts showing what my mileage was on given days. You just have to argue & negotiate a lot of this.

Reply by John Schenk on 3/4/11 6:58pm
Msg #375160

Re: No. It's one of the two areas that the IRS red flags for

I don't always keep all my oil change receipts, although I try to keep them. As far as mileage, I record it in my notary journal for each closing which includes the address of the closing, and I write off every 1/10th of a mile going to the closing and to drop at FedEx or UPS hubs. Never even thought about writing off a meal for a closing. Have thought about writing off some trips to the D/FW metroplex to meet with title companies and signing services before, but haven't done that yet.

JJ

Reply by Linda_H/FL on 3/4/11 2:44pm
Msg #375140

I'm curious - is this the same audit as last July?

It's still going on? Or is this another one?

Reply by JustANotary on 3/4/11 3:05pm
Msg #375144

Re: I'm curious - is this the same audit as last July?

Same audit. My CPA is in a different state & it took 4 months for them to decide if the audit would be done in my state or the CPA's state.

Reply by Linda_H/FL on 3/4/11 3:11pm
Msg #375146

So your CPA filed these meal deductions?...wow n/m

Reply by MW/VA on 3/4/11 3:13pm
Msg #375147

They are tough. By making one false deduction, they would

have gone after the other. That's what taxes & audits are all about. The burden of proof rests with you. It's a good thing you had a mileage log for documentation, otherwise they probably would have knocked that one out on you, too. Good luck. A reminder, just because you have a CPA or someone who SHOULD be knowledgeable prepare your taxes, you are still the one who is in the hot seat.

Reply by John Tennant on 3/4/11 3:05pm
Msg #375143

Meals are a deduction unless you are entertaining a client. Meals can also be a deduction when it is necessary to stay overnight while away from your business home base. Even then, only 50% of the total cost is a deduction. This is from IRS Pub 17. As a California Registered Tax Preparer I am regularly asked this question.

Good luck on your audit.

Reply by Linda Juenger on 3/4/11 3:08pm
Msg #375145

You may want to re-read what you posted John. I think it

is a typo. I think you mean meals are NOT a deduction unless you are entertaining a client.

Reply by JanetK_CA on 3/4/11 3:33pm
Msg #375149

Re: You may want to re-read what you posted John. I think it

I'm sure you're right.

BTW, I didn't see anyone mention that if you DO decide to write off a business meal, you're supposed to record the person you were with and the business purpose. (The date, time and place would presumably be on your receipt - which you should save.) And I'm not even sure you can write off the whole thing. (The tax experts here would know, but it might just be a certain portion - or I could be confusing that with overnight stays.)

Reply by GOLDGIRL/CA on 3/4/11 4:17pm
Msg #375153

Geez! What part of "mobile" ....

did the IRS scrooge not understand when she wanted to disallow your write-off for mileage. Might as well hang up our seals if we can't deduct our mileage driven. Yikes!

Reply by Glenn Strickler on 3/4/11 6:59pm
Msg #375161

Re: Geez! What part of "mobile" ....

She may have wanted to disallow the deduction because the records were not clear enough to separate business mileage from personal mileage. I always keep a log with start and finish odometer readings. Simple thing to do. Was never challenged on that point when I had an audit several years ago.

Reply by BrendaTx on 3/4/11 7:15pm
Msg #375163

That is the ONLY acceptable way, Glenn.

*I always keep a log with start and finish odometer readings.*

If you don't do that, it might not be allowed.

Reply by John Schenk on 3/4/11 8:33pm
Msg #375171

Re: That is the ONLY acceptable way, Glenn.

I'd be willing to fight that. I begin and end at the same place for every closing. Address and mileage to and from there is documented, as well as mileage to FedEx and UPS hubs. Mine is a matter of public record recorded in my journal. Certainly don't want to encourage an audit, but I don't take any deductions off the wall. It's worked so far for me. If/when I get audited, I'll let you know how it holds up.

JJ :-D

Reply by BrendaTx on 3/4/11 9:08pm
Msg #375176

I understand the logic, John...I Do!!

The problem is that is not the way that the federal tax rules are written. There is supposed to be a log with beginning and ending mileage on every business trip (errand) taken.

Not my rules...just the good ol' US of A's IRS.

Reply by MW/VA on 3/4/11 10:05pm
Msg #375179

IRS requires written proof. If you don't keep a log &

accurate records it would probably be disallowed.

Reply by CopperheadVA on 3/5/11 7:26am
Msg #375191

Re: IRS requires written proof. If you don't keep a log &

That's why I cringe when I see people say that they use their Mapquest printout as their proof of mileage. Unless they are also writing down their actual starting and ending mileage on each Mapquest printout, I'm not sure their mileage deduction would be allowed during an audit. Also, a mileage log has everything in one place. It's really not that big a deal to keep one - you just have to train yourself to log each trip when you get into and out of the car.

Reply by JustANotary on 3/5/11 8:28am
Msg #375193

Re: IRS requires written proof. If you don't keep a log &

I had a mileage log & all. They still tried to disallow, you just have to negotiate for lots of stuff. BUT you do NOT HAVE to have a mileage log! The letter I received from the IRS telling me I was being audited said that if I did not have a log I could reconstruct one.

Reply by John Tennant on 3/4/11 10:20pm
Msg #375184

Re: You may want to re-read what you posted John. I think it

Thank you Linda. Very bad typo on my part.

Reply by John Tennant on 3/4/11 10:23pm
Msg #375185

Re: You may want to re-read what you posted John. I think it

Yep, I left a little out. "Meals are deductible when traveling overnight, or when entertaining a client. Per IRS 274b (n) the deduction for meals and entertainment entertainment expenses is limited to 50% of the amounts that would otherwise be deductible. The 50% limit applies to meals associated with business travel, and applies even if the meal cost is not separately stated from the total cost of the event."

Gotta watch myself there.

Reply by CF on 3/5/11 10:45am
Msg #375215

Confirmations: wouldn't that back up the mileage logs? n/m

Reply by JustANotary on 3/5/11 1:02pm
Msg #375234

Re: Confirmations: wouldn't that back up the mileage logs?

Yes, they have to consider all of that as supporting documentation. They will try to say you HAVE to have a mileage log (even if you recreate it) and I did have a mileage log, but they really can not make you do that and must consider other proof.

But what happens is, you are negotiating. When my CPA was insisting that they count all of my mileage, she started asking for the names & phone numbers of all of the title companies I received payments from that year.

Reply by Linda_H/FL on 3/5/11 1:13pm
Msg #375236

Re: Confirmations: wouldn't that back up the mileage logs?

"When my CPA was insisting that they count all of my mileage, she started asking for the names & phone numbers of all of the title companies I received payments from that year. "

Sounds like she's (a) very zealous about her work; and (b) really has it in for you..

MHO