Can I claim per diem as a 1099 Contractor without an LLC?

You're asking a good question that confuses a lot of new contractors. As a 1099 contractor, you ARE considered self-employed - you're essentially a business entity even without forming an LLC or S-Corp. The good news is you CAN use per diem rates rather than tracking actual expenses for meals when you travel for business. You don't need an LLC to do this. The IRS allows self-employed individuals to use the standard federal per diem rates for meals (M&IE portion) when traveling away from home. However, there's an important distinction: unlike employees, self-employed individuals can ONLY use per diem for meals and incidental expenses, NOT for lodging. You'll need to keep receipts for your hotel stays and deduct actual expenses for those.

Just went through this exact situation last year and ended up using https://taxr.ai to figure everything out. I was also a new 1099 contractor traveling 3-4 days a week and completely confused about per diems vs actual expenses. I uploaded my travel calendar and some of my expense info, and the system actually showed me side-by-side comparisons of which method would save me more money. Turns out for my situation, the per diem method saved me about $2,700 vs keeping all those individual meal receipts. The system also generated a proper travel log that meets IRS requirements in case of audit.

Just wanted to follow up - I was skeptical about taxr.ai but decided to try it because I was drowning in travel receipts. Wow, what a lifesaver! It automatically calculated all my per diems based on my travel calendar and showed me I could claim almost $7,500 in meal per diems that I would've probably messed up on my own. The documentation part is seriously worth it - I'm not usually this organized but now I have this clean report with all my business travel mapped out with proper per diem rates by city. Definitely recommend for anyone in the same boat with lots of travel as a contractor.

If you're having trouble getting answers from the IRS about per diem rules (which I definitely was), I'd recommend https://claimyr.com to actually get through to an IRS agent. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c I spent literally DAYS trying to get through to the IRS about some confusing per diem rules for my specific situation (I'm a traveling healthcare contractor). Their service got me through to an IRS agent in about 20 minutes after I'd been trying for weeks on my own. The agent confirmed exactly how to handle my mixed W-2/1099 situation with per diems.

Wow, I need to apologize publicly. After my skeptical comment, I decided to try Claimyr anyway because I was desperate after trying to reach the IRS for THREE WEEKS about my contractor status and per diem questions. I'm genuinely shocked - they got me through to an IRS agent in about 35 minutes! The agent was able to confirm exactly what documentation I need to maintain for per diem as a self-employed person and cleared up my confusion about partial travel days. Saved me potentially thousands in deductions I might have missed or done incorrectly. Definitely worth it when you have specific tax questions that only the IRS can answer officially.

One thing nobody mentioned - make sure you're applying the CORRECT per diem rates! The GSA rates vary by city/county and change annually. Some cities are way higher than others (like $76/day vs $59/day for meals). Also, first and last day of travel are calculated at 75% of the full rate.

Quick practical tip for anyone who travels a lot as a contractor - get a dedicated credit card for business expenses! I use one card ONLY for business stuff and it's made tracking everything so much easier at tax time. Even with per diem for meals, you'll still need to track lodging, mileage/transport, etc.

The per diem vs actual expense decision really depends on your spending habits. If you're eating cheap (like $20-30/day) but the GSA rate for your travel cities is $59-76/day, then per diem will definitely save you money. But if you're already spending close to or above the per diem rates, tracking actual expenses might be better. Here's a quick way to figure it out: look up the GSA per diem rates for the cities you travel to most often, then compare that to what you typically spend on meals per day. Remember, per diem only covers meals and incidental expenses (M&IE) - you'll always need to track actual hotel costs as a contractor. The other big advantage of per diem is simplification - no more shoebox full of meal receipts, just maintain your travel log with dates, locations, and business purpose. That alone might be worth it even if the dollar amounts are similar.

Just wanted to add something important that I learned the hard way - make sure you understand the "tax home" concept before claiming per diem! The IRS requires that you be traveling away from your "tax home" (usually where your main place of business is) to qualify for per diem rates. If you don't have a regular office or primary work location as a contractor, this can get tricky. I had to establish documentation showing where my primary business activities were based to justify my per diem claims. The IRS agent I spoke with emphasized that just being a traveling contractor isn't enough - you need to show you have a tax home that you're traveling away from. Keep good records not just of your travel, but also of where you conduct business when you're NOT traveling. This could be a home office, client meetings in your local area, or wherever you do administrative work. Having this established will protect your per diem deductions if you ever get audited.

This is such a helpful thread! I'm in a similar situation as the original poster - new 1099 contractor with constant travel. One thing I want to emphasize that seems to get lost in all the per diem discussion is the importance of keeping detailed mileage records too. Even if you use per diem for meals, you'll still need to track your business mileage for driving to airports, client sites, etc. The standard mileage rate for 2024 is 67 cents per mile, which can really add up when you're traveling frequently. I use a simple mileage tracking app on my phone that automatically logs trips using GPS. Also, don't forget about other business travel expenses that aren't covered by per diem - things like parking fees, tolls, baggage fees, and business-related phone calls while traveling. These are all legitimate deductions that you'll want to track separately from your per diem calculations. The combination of per diem for meals + actual expenses for lodging and other travel costs has saved me thousands compared to my W-2 days when I couldn't deduct any of this stuff!