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self-employed using per diem + M&IE...please advise

self-employed using per diem + M&IE...please advise

Old Jul 28, 19, 12:13 pm
  #1  
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self-employed using per diem + M&IE...please advise

self-employed, travel ~100-days/year US & international since 1989;
have always deducted actual expenses, saved receipts, etc.
but my expenses almost always less than current per diem + M&IE;
will be calling IRS to ask questions, but seeking comments:
1. IRS allows self-employed to use Per Diem + M&IE rates
& no receipts required, right? (according to tax guide just read)
2. if I know in advance that Per Diem + M&IE rates are higher
that what I typically spend (especially due to points-miles), am
I not allowed to do so as it is tax cheating?
3. ground transport at destination is included in M&IE, but
what about flights to-from destinations -- can they be a
separate actual expense with receipts?
4. if I have always deducted actual expenses, can I switch to
Per Diem + M&IE for 2019 taxes?

Any other comments-advice appreciated.
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Old Jul 28, 19, 2:07 pm
  #2  
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You have adopt a business practice of one or the other. You can't do this on a per trip or per day basis, e.g. calculate your expenses and then decide which to use.

So, the key is to do some rough calculations and choose the method which is most advantageous to you. Don't forget that using the per diem method means less paperwork. You will still need to keep receipts for air travel and hotels, car rentals, and parking (exceeding $25).
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Old Jul 28, 19, 2:25 pm
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Originally Posted by Often1 View Post
You will still need to keep receipts for air travel and hotels, car rentals, and parking (exceeding $25).
Thanks for response.
If lodging & ground transportation are included in PerDiem,
but PerDiem doesn't require receipts, why still need
receipts for hotel-rental car-parking over $25. Or is it $75 in 2019?
Receipts prove travel? Would cc statement prove travel & replace
need for individual receipts? Also, in my case, photos prove travel...
Other comments appreciated!
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Old Jul 28, 19, 2:35 pm
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Where are you getting your M&IE rates?

If these are the GSA rates which IRS permits others to adopt if they wish, they do not include travel or hotel.

I guess that it would be best if you posted the specifics of what you are looking at.
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Old Jul 28, 19, 5:42 pm
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Originally Posted by Often1 View Post
Where are you getting your M&IE rates?
https://www.irs.gov/faqs/small-busin...ome-expenses-3

https://aoprals.state.gov/web920/per_diem.asp
non-US

https://www.gsa.gov/travel/plan-book/per-diem-rates
Continental US

Is it correct that self-employed can use M&IE rates rather than actual M&IE expenses
but can never use Lodging Maximum rates -- they must use actual lodging rates...?

(lodging rates)** + (M&IE rates) = PerDiem rates

**not available to self-employed

aside: wife travels with me & prepares daily itinerary full of photo opportunities,
does that open up possibility of employer-employee relationship which then
opens up legit per diem lodging usage...? An example reason for doing so:
Edinburgh UK lodging rate = $507 whereas we might use points or AirB&B
for $75-100 nightly...
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Old Jul 28, 19, 8:28 pm
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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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Old Jul 29, 19, 9:24 am
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Originally Posted by arttravel View Post
I am self employed....
I think the per diem lodging is out ...on the self employed.
Thanks for response.
I had hoped IRS publication never stating,
"self-employed cannot use lodging rates"
was an open door to using lodging rates...
but am now sure call to IRS will confirm
lack of printed disallowing does not equal allowing...
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Old Jul 29, 19, 9:59 am
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Originally Posted by TravelPhotographer View Post
... Any other comments-advice appreciated.
Since you asked, even though it's not related to the topic of this thread: don't hit Return when you approach the end of a line in your posting dialogue box. Save that for paragraph breaks. Let the bulletin board software wrap words for you. Your posts will look way better if they don't have all those short lines.
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Old Jul 29, 19, 3:51 pm
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Originally Posted by TravelPhotographer View Post
Thanks for response.
I had hoped IRS publication never stating,
"self-employed cannot use lodging rates"
was an open door to using lodging rates...
but am now sure call to IRS will confirm
lack of printed disallowing does not equal allowing...
I am interested in hearing what the IRS says -- hotel per diems are only for employees from what I understand and as self employed we are not eligible.
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