I am a sole owner-employee of an LLC taxed as an S-Corp. I provide consulting services where I need to travel to a client site 4 days out of the week. My company bills another consulting company which then bills the client for my expenses for reimbursement by them. This particular client includes a $34/day meal allowance without receipts needed. The GSA standard meal allowance for the client's location is $61/day.

I have read in previous posts that the $34/day is 100% deductible for my business, since the client is the one who assumes the 50% deduction responsibility. My question is can I take the difference from $61/day and $34/day = $27/day and give that to myself as Standard Meal Allowance, and then take have my business take the 50% deduction on the $27/day? Would I have to do a 3/4 prorated amount on the $27/day for the first and last day of travel? My client does not make us do the 3/4 of $34/day on first and last day of travel, but we do get an extra $17 if we travel on a Sunday for Monday-Thursday work week.

I am a sole owner-employee of an LLC taxed as an S-Corp. I provide consulting services where I need to travel to a client site 4 days out of the week. My company bills another consulting company which then bills the client for my expenses for reimbursement by them. This particular client includes a $34/day meal allowance without receipts needed. The GSA standard meal allowance for the client's location is $61/day.==> Normally amounts you are reimbursed for your out of pocket expenses are not taxable. However, since it's not accountable, any money they pay you is taxable income to you as taxable wage on your W2 box 1. You can take a deduction on your taxes ,limited to 50%, but UNLESS you itemize deductions on Sch A of 1040, you can not deduct the out of pocket expenses on your return.




I have read in previous posts that the $34/day is 100% deductible for my business, since the client is the one who assumes the 50% deduction responsibility. =====>It depends; if it is reimbursed under the accountable plan , then you do not need to include the out of pocket expense on your return, however, under non-accountable plan( this is your case), to deduct the expenses , you need to itemize the expenses on sch A of 1040 ; You can use the form 2016 to claim your reimbursed employee business expensesn Sch A of 1040.


My question is can I take the difference from $61/day and $34/day = $27/day and give that to myself as Standard Meal Allowance, and then take have my business take the 50% deduction on the $27/day? ==============>>I think so but as mentioned above, you , under the non accountable plan, need to itemize deductions on Sch A of 1040;UNLEDS you itemize then, you can not deduct your reimbursed meal expenses on your return.

How is my case a non-accountable plan? I have an accountable plan in my place for my company.

OK i see then it must be ture; i thought that the exp was reimbursed under the non accountabl eplan as you said,"This particular client includes a $34/day meal allowance without receipts needed." As you can see, under the non accountable plan, an employee is not required to / does not NEED to substantiate timely those expenses to his employer with receipts or other documentation. . Simply put if this is the case the employer can still pay the employee, but it will be considered wages. It then becomes the employees burden to offset these expenses on their personal tax return as said previusly. However, under th accountabl erplan as yu can see, any amounts paid that meet the the requirements above are not considered wages. Since they are not wages they are not subject to withholding and payment of income, social security, medicare, and FUTA taxes. If any of the requirements is not met the reimbursement or allowance is considered income under a nonaccountable plan and are thus subject to income, social security, medicare, and FUTA taxes. Accountable plans are where the employees reimbursement would be considered non-taxable.
.Under the accountable plan you , as an payee or an employee, is better off