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Thread: self-employed using per diem + M&IE...please advise
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Old Jul 28, 2019, 7:28 pm
  #6  
arttravel
 
Join Date: Jun 2013
Location: NYC
Programs: UA
Posts: 444
I am self employed.

It is my understanding that self employed can only use the M&IE per diem and not lodging. From the IRS

Who can use the standard meal allowance.
You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses.

https://www.irs.gov/publications/p46...ublink10009927

Do you actually have a corporation? Or sole proprietor?

As for the wife issue and the employer/employee -- is she an employee? Do you withhold taxes from her paycheck?

And even if a corporation and have her employed you run into the issues of the related to your employer problem:
Per Diem and Car Allowances
If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply.
  1. Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business.
  2. The allowance is similar in form to and not more than the federal rate (defined later).
  3. You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1) within a reasonable period of time.
  4. You aren’t related to your employer (as defined next). If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement.
If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you won’t be considered to have accounted to your employer. In this case, you must be able to prove your expenses to the IRS.
Related to employer.

You are related to your employer if:
  1. Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant;
  2. Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock; or
  3. Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your emplo
So no I think the per diem lodging is out on the spouse and on the self employed. And honestly I would not even try to do something too clever with trying to argue spouse as employee.
basically it sounds too much like trying to inflate expenses.

Do you have a proper accountant?
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