I have a client who is a self employed professional engineer providing consulting and project management services. He wants to structure his business invoices to his clients such that he can deduct 100% of his M&IE. His business is organized as a single memeber LLC, and he has a great deal of travel away from home. He also has some international travel expenses.
Please verify my understanding that those M&IE that are accounted to, invoiced to, and paid by the taxpayer's client are deductible at 100% on the tax payer's schedule C. In contrast, those legitimate business M&IE that are in town or out of town, but not accounted to or invoiced to a client (such as trying to secure a new client or contract) are only deductible at 50%.
- Does his invoice have to itemize on separate lines for his M&IE, or does is just need to be in his contract with the client that all his M&IE are to be reimbursed?
- Can he invoice his client the CONUS federal per diem rate for M&IE and then deduct that exact same M&IE on his schedule C at 100%? Thereby reducing his need to keep track of actual receipts.
- Can he invoice his client for an actual amount for M&IE and then deduct the CONUS per diem M&IE on his schedule C at 100%?
- Can he deduct the INTERNATIONAL federal per diem rate for M&IE on his schedule C at 100% if he invoices his international client for the same? Or does he have to keep actual receipts and records for his international M&IE. Because his internatinal client will not be responsible for the ultimate 50% limitation.....will that disqualify the taxpayer from deducting 100% on his return?
Thanks so much for any help you can provide!