Posted by jnew on 3/10/11 1:12pm
Msg #375744

Meals and Transporation deductibility

I checked with my tax accountant on the deductibility of meals and transportation. The answer I got was unexpected. Meals taken by me are not a business expense unless the cost was incurred by entertaining a client to promote my business. The fact that I had to pay for a meal while on a job makes no difference, it would not apply. I think this was answered in a post from a couple of days ago. The other part surprised me. The allowance for business miles only pertains to non-reimbursed business travel. If the cost of transportation is a part of my invoice or my charge to the customer, then I can not deduct the mileage from my taxes. So I guess if I were to be audited, I would have to show the I.R.S. that my fees do not include the cost of transportation.

Reply by John Tennant on 3/10/11 4:00pm
Msg #375787

Hey jnew,

I totally agree on the meals comment but question the mileage reimbursement documentation. I have completely reviewed both Publication 535, business expenses, and schedule C instructions for that documentation. They both refer to reimbursements for an employee of your business, or reimbursements that you receive as an employee. Nowhere does it suggest, or stipulate, that mileage cannot be taken as by a mobile contractor.

In my own experience, I have always taken the mileage on all trips from my home office, no matter how far or for how many days.

Could you please ask your tax accountant to identify the IRS publication that is being referred to.

Thank you.

Reply by SharonMN on 3/10/11 4:19pm
Msg #375789

Just because you charge for something doesn't mean you can't deduct the expenses you incurred in performing the service. If that were the case, independent contractors wouldn't be able to deduct ANY business expenses (paper, gas, copy center) because obviously it is all rolled into your charges - you're not providing these things for free.

Reply by Doris_CO on 3/10/11 4:53pm
Msg #375795

Non-reimbursed business travel pertains to an employee, not a self-employed sole proprietor. I think your tax accountant has the two confused.

Reply by jnew on 3/11/11 12:23am
Msg #375851

Thanks for the feedback. I have been deducting my mileage for the past several years and I think he may have scared me unnecessarily. I am going to talk to the other people at their office and see if he had not misunderstood my inquiry.

Reply by MW/VA on 3/11/11 7:25am
Msg #375863

It's a common misunderstanding. The rules on mileage are strict and are being enforced by the IRS when it comes to mileage claimed by an employee. That's not our situation & I claim all mileage to & from an appt., as well as mileage to ship pkgs., go for supplies, etc. Even so, I don't end up with excessive nos.

Reply by Joan_OH on 3/11/11 9:43pm
Msg #375952

Wow! I think you need a new Accountant.

If somewhere, somehow, someone changed the rules that we can't deduct mileage, I think a whole bunch of us are in trouble.

Joan-OH

Reply by EileenMO on 3/12/11 11:23am
Msg #375968

I prepare tax returns during tax season. Meals as a general rule cannot be deducted because the IRS says that you would eat anyway. Mileage however can be deducted as a cost of doing business.