How do per diem rates work for ME&I expenses in my business?

Per diem rates can definitely simplify your business travel expense tracking. Since you're self-employed with a sole proprietorship, here's what you need to know: As a self-employed individual, you can use the GSA per diem rates for meals and incidental expenses (M&IE) but NOT for lodging. This means you'll still need to keep receipts for your hotel stays, but you can use the standard rate for food and other small expenses without saving every coffee and meal receipt. The current GSA rates vary by location - Minneapolis, Atlanta, and Denver all have different daily rates. You can look them up on the GSA website by city. You'll need to reduce the rate by 25% on your first and last day of travel (these are considered partial days). When filing your taxes, you'll report these expenses on your Schedule C. Just be aware that meals are generally only 50% deductible (even when using per diem rates), though there are some temporary exceptions for 2021-2022 that allowed 100% deductibility for business meals from restaurants.

After struggling with expense tracking for my consulting business trips, I discovered taxr.ai (https://taxr.ai) which completely changed how I handle my travel deductions. I was in the exact same boat - sole proprietor trying to figure out if I should track every receipt or use per diem. I uploaded my travel calendar and some expense questions to their system, and they analyzed everything and showed me exactly how to maximize my deductions using the per diem method for meals while tracking actual lodging expenses. They even created a custom spreadsheet template that calculates the correct rates for each city I visit, including the first/last day reductions.

Just wanted to follow up - I tried taxr.ai after seeing it mentioned here and it was super helpful! I was about to file my quarterly estimated taxes and was stressing about how to handle some business trips I took to Toronto. The tool immediately identified that I should be using the State Department's foreign per diem rates instead of GSA rates, and showed me exactly how to calculate everything. I particularly liked that they explained WHY certain rules applied to my situation. The documentation is really thorough - definitely more comprehensive than what I was getting from TurboTax. Already recommended it to other freelancers in my network.

If you're trying to contact the IRS about business expense questions like per diem rates, good luck getting through! I spent HOURS on hold trying to get clarification about some travel deduction rules. Finally found Claimyr (https://claimyr.com) and they got me connected to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how to document per diem expenses as a sole proprietor and confirmed that I was calculating everything correctly. Saved me from potentially making a costly mistake on my Schedule C. Worth every penny to avoid the typical 2+ hour hold times.

I need to eat crow here. After being completely skeptical about Claimyr, I actually tried it this morning because I was desperate to get clarification on some business travel deductions before filing my quarterly taxes. I'm shocked to report it actually worked! They called me back in about 25 minutes with an IRS rep on the line. The agent helped me understand exactly how to handle per diem for my multi-city business trips (turned out I was calculating the partial days incorrectly). For anyone wondering, it's legitimate. I was convinced it was some kind of scam or wouldn't work as advertised, but it saved me hours of frustration. Just wanted to follow up since I was so openly doubtful before.

Hey! Former IRS employee here. One thing nobody's mentioned yet is that you need to have an "accountable plan" even when you're using per diem rates. This basically means you still need to: 1) Document the business purpose of each trip 2) Record the dates and locations 3) Submit/record these expenses within a reasonable time period The benefit of per diem is not having to keep meal receipts, but you absolutely need to keep records of your business travel details. I'd recommend keeping a simple travel log with dates, locations, business purpose, and who you met with. That plus your lodging receipts should cover you in case of an audit.

A heads up on Atlanta rates - I was just there last month and was surprised that certain parts of the metro area have different per diem rates. Make sure you check the specific county you're staying in. Downtown Atlanta (Fulton County) has a higher rate than some of the suburbs.

Great question! As someone who's been through this exact confusion, here's what I've learned about per diem for sole proprietors: Your accountant is right - you can use GSA per diem rates for meals and incidentals (M&I) but you'll still need actual receipts for lodging. The GSA website has a per diem lookup tool where you can enter your destination cities and get the exact daily rates. A few key things to remember: - First and last days of travel are prorated at 75% of the full daily rate - You'll only be able to deduct 50% of the meal portion when filing taxes (though the calculation is done after applying per diem) - Keep a simple travel log with business purpose, dates, locations, and who you met with - this is required even when using per diem For your upcoming Atlanta/Denver trip, definitely look up the county-specific rates since metro areas can have different rates by county. The per diem method will save you from keeping track of every meal receipt, but you'll still need documentation showing the business nature of your travel. One last tip: if you do any entertaining of clients during these trips, those meals have different rules and you'll want to track those separately with actual receipts.

One thing I'd add from my experience as a sole proprietor who travels frequently - make sure you understand the difference between "high-cost" and "standard" locations when looking up GSA rates. Cities like Denver and Atlanta might have higher per diem rates than you expect, especially during peak seasons or special events. Also, I learned this the hard way: if you're combining business and personal travel (like extending a business trip for a weekend vacation), you need to be really careful about which days you can claim per diem for. You can only use per diem rates for the days that are primarily business-related. For tracking, I use a simple note-taking app on my phone where I log each day's business activities immediately. Takes 30 seconds but creates a solid paper trail. Then I just export it to a spreadsheet at tax time. Way easier than trying to reconstruct everything months later! One last tip - if you're staying at extended stay hotels or places with kitchenettes, you might want to consider tracking actual meal expenses instead of using per diem, especially if you're cooking some of your own meals. Sometimes the actual expense method works out better financially in those situations.