pinniped

I think the distinction is that if you're a truly independent contractor (e.g., self-employed), you'd track it as an expense for your tax purposes...but you'd still be interested in minimizing expenses on unnecessary things. Breakfast, Wifi, parking, etc.: you'd actively try to get those kinds of things out of your expenses if at all possible.

I'd also question the take that "most" people are still on unlimited expense accounts. I've traveled for a few different companies and a lot of different clients and I was *usually* on a flat per diem or a daily cap. In either case, I avoided any hotel that did not include breakfast in the room rate.

FinnishFlash

I have actually never met anyone who is on expense account. Sounds like a stupid, bureaucratic system that doesn't add any value at all.

Maybe most people in us are on expense account, I have no idea. But I do know that most people don't live there and OP's link was to an article written by Press trust of India based on a global survey of hotels.com.

joshua362

I agree with you 100% but I've never met anyone who ISN'T on an expense account system here in the US. Could be the tax laws. I'd gladly take the $30, 40 or $50 flat per diem and make a game of seeing how much I could pocket. I'd be $100,000's richer and 50 pounds skinnier if I could...

joshua362

Somewhat sure that 100% of meals relating to one's own travel is fully deductible while meals entertaining clients, company picnics and Christmas parties are the 50% kind...

joethekay

IRS Pub 463 (2013) states:
The 50% limit applies to business meals or entertainment expenses you have while:
•Traveling away from home (whether eating alone or with others) on business,
•Entertaining customers at your place of business, a restaurant, or other location, or
•Attending a business convention or reception, business meeting, or business luncheon at a club.

CJKatl

Yes, and Form 2106 has a separate column for meals and entertainments, and, in bold, warns not to include meals and entertainment with the other expenses in Column A. Form 1040 Schedule C Line 24 has 24a for all expenses but and 24b says "Deductible" meals and entertainment. Despite that, we see people fully deduct meals and entertainment all the time. We are analyzing income based on the tax return and cannot tell them they are doing something wrong, but my reading of the forms is in line with this publication.

Anyone who knows me and knows what I do for a living would wonder why I posted my earlier comment as a question.

joshua362

My bad, as it (as usual) defies common sense! Personal meals when traveling is kind of essential to one's health while strips clubs, alcohol other forms of client entertainment is quite optional...

CJKatl

When we do business in New Orleans, our clients have convinced us that strip clubs and alcohol are mandatory.

sethb

Congress apparently feels that it would cost you half as much to eat at home, so only the excess is deductible.

That doesn't apply to them, of course.

CJKatl

Meal and entertainment deductions for Congresspeople would require they actually pay for their own meals in the first place!

The "you'd pay for your meal anyway" explanation is a common misperception... If you were to take 1,000 customers out to dinner running a $40,000 check, you'd still only be able to deduct half. Certainly you wouldn't have stayed at home and eaten $20k worth of food, even at today's prices.

Thirty plus years ago, Congress wanted to get rid of the three martini lunch deduction, so they proposed ending all meal and entertainment deductions. The hospitality industry protested. There were Congressional hearings. The compromise was that some, but not all, of the expenses could be deducted. The percent has changed from time to time, but it's really because of that compromise, not some theory that people would have to eat anyway.

iztok

Don't get me wrong. While I work for a mid size company I still treat expenses as if they were from my own pocket. We do have limits of 15/25/35 for breakfast/lunch/dinner but I usually grab free breakfast (usually travel with a blender and make "hotel smoothies"), lunch is usually in 15-20 range, rarely higher unless I am at the airport with limited options, dinner at 35 is tough if you want a decent meal and a drink as all of the above numbers include tax and tips. Our hotel is typically $150 limit and I try to aim at $100-120 max, sometimes it is hard (say SFO, SAN, NYC etc...)

iztok

Never said unlimited. I have expense account but it is fairly limited 15/25/35/150 breakfast/lunch/dinner/hotel.

sethb

Their owners take the deduction.

I know that the limitation on deductibility of business meals is based on a compromise between "we shouldn't pay for their food" and "it's a legitimate business expense". It also leads to weird (useful) results: e.g. a company officers dining room expenses are 50% deductible; however, any leftover food that's donated to a charity is 100% deductible.

iztok

Am I wrong to assume most self employed would actually work through some sort of corporation, like LLC?

SkiAdcock

I can't speak for 'most' self-employed, but I know a lot are sole practitioners & are not LLC.

Cheers.