Can someone please explain meal deduction?

Called per diem. Someone else here can explain it since i never took it

 

It is really M&IE.

Pub 463 pages 6 and 12 cover this.

M&IE is not income. The IRS allows you a standard daily rate of $63 US and $68 Canada.

Now you are allowed 80% for full days and 80%(75%) for partial days.

You are out 300 days.

280 are full ($63*80%)*280 = $14112.00
20 are Partial (($63*80%)*75%)*20 = $756.00

Total $14868.00 is what you are allowed for M&IE.

Now if you paid yourself $12000.00 from the company, then you are still allowed $2868 to claim.

Now, if you use Turbo Tax... you have to figure a little differently.

You take the Partial days - 20*75% = 15 full days.

You then add 280+15 = 295 and put this number on Turbo Tax. Now Turbo Tax will multiply automatically by 80%.

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If the company pays you M&IE it is done before taxes and is not taxed. But, they will never pay you the full amount or go over. If they go over they are dropped out of the IRS program. If you are an O/O paying yourself from your company, then still this is not deemed taxable income. It is part of what you are allowed. Just do not go over the limits of what is allowed.

What you claim for M&IE is subtracted from your gross income.

 

You also need a permanent address to claim it. (Even if you don't go there very often). The meal allowance is a deduction for meals and incidentals when drivers who are subject to the HOS regulations are away from their primary residence. If you don't have a residence, then you aren't away from it. I know a husband and wife team that sold their home after their kids were grown and on their own and bought a truck and lived on the road. They found out the hard way that they were denied the meals and incidentals deduction because of a lack of a permanent residence. I think they started using a ups store location for their mailing address.

 

If you don't have a legal home for tax purposes you can't take the IRS meal deduction. If you have a home and your works requires you to travel overnight & you are subject to DOT HOS you can deduct 80% of $63 per day for meals & Incidental costs with no receipts required,but proof you were away from home.

 

UPS Store is not a valid location for a permanent mailing address.