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Rakhi Vasavada
Rakhi Vasavada , Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4418
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I am self employed, is there a daily rate to deduct for lodging,

Customer Question

I am self employed, is there a daily rate to deduct for lodging, meals, and mileage?
Submitted: 3 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 3 years ago.

rakhivasavada :

Dear Friend,

Hello and welcome. Thank you for using Just Answer.

rakhivasavada :

Kindly remain online as I prepare your reply.

rakhivasavada :

Yes, such expenses can certainly be deducted.

rakhivasavada :

Self-employed can deduct travel expenses under certain conditions. Expenses such as lodging and meals are only deductible if the trip lasts longer than one day. However, only 50% of meals and entertainment expenses are deductible. If the business trip lasts less than one day, then only transportation costs can be deducted, not meals. The self-employed can deduct all qualified expenses

rakhivasavada :

Commuting expenses to an outside office are not deductible. If a self-employed taxpayer has a home office as a principal place of business, then all business trips are deductible. Commuting expenses are deductible if the taxpayer is out of town on a business trip and must make trips to other areas in the locality.

Customer:

I sell insurance and travel four days per week out of town from my home. I need to know the daily rate for meals, lodging and how much per mile I can deduct. Thanks

rakhivasavada :

It think, I did not convey myself clearly. Let me come over again.

rakhivasavada :

Are you trying to know about Per Diem Rates for self employed ?

Customer:

yes, I know that I can deduct them. I just need to know the acceptable rate.

rakhivasavada :

Being self employed, you are making an expense which is NOT reimbursed. In such cases, ALL of your actual expenses would qualify as deduction.

rakhivasavada :

However, under IRS guidelines, self-employed individuals, including independent contractors, adequately substantiate their out-of-town business related travel and entertainment expenditures, including meals, by maintaining a record of the amount, time, place or description, business purpose and business relationship, in the case of entertainment, meals and gifts, for each separate expense. Generally, this means that self-employed individuals deduct their out-of-town business related travel and entertainment expenses based on actual costs and not the federal per diem rates.

rakhivasavada :

the botXXXXX XXXXXne is -- you can deduct ALL actual expenses, and you are required to maintain record of all such expenses.

Customer:

So, I guess I was told wrong by another accountant stating that there is a daily acceptable rate rather then keeping receipts.

rakhivasavada :

Yes, I guess so. Because, Only employers who reimburse employees using a per diem allowance can deduct their employee's out-of-town business related lodging expenses using a per diem costing method that incorporates the federal per diem rates.

rakhivasavada :

For you, it is just recurring business expense. You are incurring them and NOT being reimbursed by anyone. It would be routine operating expenses for you would be deductible.

rakhivasavada :

Hello.. Are you there ? Do you read my replies ?

Customer:

yes, I feel the need to have an appt with another accountant. the accountant that told me this is the wife of an associate and I do not want to question her.

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