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All,

This may be a little off topic for this board but here goes...

I am a self employed consultant who was told by a potential customer that if I line item invoice them for travel expenses at the local per-diem rate ($145/day for lodging and meals according to IRS charts) they will not report it to the IRS as they would the regular 1099 income for hourly services delivered. The implication is that I won't owe taxes on the per-diem reimbursables.

Is this possible?

Thanks in advance!

-K
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I am a self employed consultant who was told by a potential customer that if I line item invoice them for travel expenses at the local per-diem rate ($145/day for lodging and meals according to IRS charts) they will not report it to the IRS as they would the regular 1099 income for hourly services delivered. The implication is that I won't owe taxes on the per-diem reimbursables.

Is this possible?


To borrow from a recent President, it depends on the meaning of "this."

At the end of the day you don't have to pay taxes on travel reimbursement. You don't get to double deduct the expenses either. To me it's more straightforward for everything to be lumped in gross receipts and then the expenses deducted. Were I the client, I'd not enjoy trying to explain, during an audit, why some payments to contractors weren't reported on a 1099, but that's not your problem.

To anticipate the followup, it doesn't matter what's on 1099's, you prepare your return from your meticulous records. The 1099's are for IRS's information, not yours.

Phil
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I am a self employed consultant who was told by a potential customer that if I line item invoice them for travel expenses at the local per-diem rate ($145/day for lodging and meals according to IRS charts) they will not report it to the IRS as they would the regular 1099 income for hourly services delivered. The implication is that I won't owe taxes on the per-diem reimbursables.

Is this possible?


If you're on a temporary assignment away from home and the assignment is not expected to last more than a year, you can deduct per diem for travel expenses. If you have any indication the contract will be extended, then the assignment is no longer considered temporary.

Good luck on getting a broker to pay per diem correctly. The problem is most brokers insist on paying per diem, by substracting from your hourly rate, instead of substracting the per diem rate per day. Also, if you do not travel home on the weekend, per diem should be paid for 7 days, instead of 5.

Sue

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