IRS Meal Allowance
There are two ways to deduct meal costs:
- Actual costs
- The IRS standard meal allowance
Regardless of the method you use to deduct meal expenses while traveling away from home, actual costs or the IRS standard meal allowance, the 50% limitation applies to both methods.
The 50% limitation also applies to meal and entertainment expenses for entertaining business associates in your own hometown.
If you stay at a hotel while traveling out of town on business and the hotel bill includes meal costs along with the room costs and other room-related costs, you must separate the meal costs and the apply the 50% deduction rule.
Exception to 50% deduction rule for meal costs for employees:
There is an exception to the 50% deduction rule for meal costs. If you're an employee and get reimbursed by your employer under an accountable plan, the reimbursement is tax free even though it covers 100% of you meal costs.
Standard Meal Allowance
M&IE Rates (Meals and Incidental Expenses):
If you're self-employed and find it difficult to keep records of your meal costs while traveling away from home on business trips within the Continental United States (CONUS), you can use the Domestic Per Diem Rates for FY 2014.
The rates in the tables coincide with the government's fiscal year, which runs October 1 through September 30. For example, the 2014 fiscal year runs October 1, 2013 through September 30, 2014.
Applying the rates:
Keep in mind, most taxpayers use a calendar year (January 1, through December 31). Therefore, the first three months of the government's fiscal year (October, November, and December) represent the last three months of the calendar year.
The per diem rates may be updated at the start of the government's fiscal year (Oct., Nov. Dec.). If the rates are updated for the government's new fiscal year, the per diem rates for October, November, and December may be different from the per diem rates for the previous nine months (January through September).
- Because of the overlapping of the government's fiscal year
with the calendar year, you may choose to:
- Use the same rates that apply to the first nine months of the year to the last three months of the calendar.
- Or, use the rates that apply to the first nine months of the calendar year (January through September) then use the updated rates that apply to the last three months of the calendar year (October through December).
Trips in the last three months:
For trips you took in the last three months of the calendar year (October, November, December), you have two options for applying the rates. Keep in mind, you must consistently use one of these options; you may not switch between options.
- Option1: Use the rates in effect for the first none months, or
- Option 2: Use the revised rates that took effect October 1
Get more information at the U.S. General Services Administration website.
The standard meal allowance does not apply to areas outside the continental United states (CONUS).
The Department of Defense establishes per diem rates for:
- Puerto Rico
- American Samoa
- Northern Mariana Islands
- U.S. Virgin Islands
- Wake Island
- And other non-foreign areas outside the continental United States.
- As well as travel to foreign countries - OCONUS (Outside the Continental United States)
The U.S. Department of State establishes per diem rates for all other foreign areas.
The table for the M&IE rates has six tiers for the lower 48 continental United States, ranging from $46 to $71. If you need to deduct a meal amount, first determine the location where you will be working while on official travel. You can look up the location-specific information at www.gsa.gov/perdiem. The M&IE rate for your location will be one of the six tiers listed in this table.
The M&IE rates differ by location. The standard domestic M&IE rate for 2013 is generally $46 per day, however, higher rates apply in major cities and other high-cost locations, such as. resort areas, designated by the government.
There are about 3,000 counties in the Continental United States (CONUS). Therefore, if you choose to use the per diem rates for meals rather than your actual expenses, check the per diem rate table to find the correct rate for your primary destination.
CONUS Rates (Continental United States)
The standard CONUS (inside the Continental U.S.) rate applies to all counties not specifically listed. Cities not listed may be located in a listed county. The standard CONUS rate for meals is usually $46 and lodging is $77. However, as the table shows, the rate may be higher depending on the domestic location.
You can get more information on the U.S. General Services Administration website.
GSA establishes the CONUS (continental United States) per diem rates. It provides the maximum reimbursement allowances up to which federal employees are reimbursed for expenses incurred while on official travel.
The M&IE allowance is broken down into:
The basic and high-cost area rates are determined by U.S. General Services Administration.
TIP: If you keep records of your meal expenses and it turns out that your actual meal costs were less than your meal allowance, you can still claim the higher allowance.
If Employer is a Relative
Employees may not use the M&IE allowance if:
- The employer is a relative (parent, brother, child, grand child, grand parent) or
- The employee owns over 10% of the employer's outstanding stock.
Travel Expense Records You Must Keep
Even though you use the meal allowance, you must still keep records of:
- Business purpose of trip
Transportation Industry Workers
Self-employed persons and employees in the transportation industry may elect to claim a special M&IE rate. This avoids having to apply CONUS or OCONUS rates on a locality-by-locality basis.
OCONUS (Outside the Continental United States)
Different rates apply for travel in Alaska, Hawaii, Puerto Rico, and U.S. possessions, as well as travel to foreign countries. Get the rates from the U.S. General Services Administration website.
- Return to the Business Deductions Table of Contents to find related links