Business travel expense deduction
Hi Linda
Thanks so much for hosting such a brilliant and informational website. I hope to learn a lot from here.
I have been working on 1099 - traveling quite a bit outside my geographical area on overnight trips (I live and work in California). Starting 08/01/2008, I have formed a single employee S-corp. Since my actual expenses on meals during my business trips were not much, I have been thinking of deducting meals based on per diem rates rather than actuals. I have recently read that as a more than 10% owner, I cannot deduct based on per diem rates on any business trips that I make as an employee of the S-corp.
Here is my question. For all my business trips this year that I have made until 07/31/2008 as a 1099, can I use the per diem rate for deduction; while I shall use actuals for all business trips after 8/1/2008 that I make as an S-corp employee ?
Thanks so much.
--Neil
- Add new comment
- 367 reads
Per Diem Travel Expenses for Sole Proprietors
Hi Neil,
You can use per diem rate for meals & incidentals only. You must use actual costs for your lodging expenses.
Remember only 50% of the meals & incidentals per diem is deductible so you might be better off using actual expenses (which are also 50% deductible). Also, only use 75% of the per diem rate on travel days.
I hope this helps.
L:)
Per Diem Travel Expenses for Sole Proprietors
Thanks Linda. So that I am clear in my understanding, do you mean (1) or (2)? Please see below.
(1) I can use per diem rates for meals and actuals for lodging expenses until 7/31 when I was a sole proprietor; but I would need to use actuals for all business expenses starting 8/1 when I converted the business into a one-employee S-corp.
(2) I can use per diem rates for meals and actuals for lodging expenses while I was a sole proprietor as well as when I am an employee of the one-person S-corp.
Regards
Neil