Accounting & Bookkeeping & Small Business Forum

[Guest]

I have a client who is the sole shareholder of an S Corp and is a computer consultant who works at the client site. He has an office location, but mostly he works at home and at the client's job site.

I am new to this industry (1 year officially) and I have some tax deduction questions.

As an independent contractor can he:

Deduct his mileage to/from job site?
Can he deduct lunches purchased while working at the client site or only if he is officially taking the client to lunch?
He is going to be traveling by plane for a new project, when he bills the client for travel and entertainment, how should he claim the reimbursement, as income?
In my old job, my expense reimbursements were always taxed through payroll, how would he handle this with his payroll service?
Since he has an offsite office, but still works from home quite a bit, can he deduct the home office space and related expenses, ie. phone, utilities, etc.?
Thank you in advance.


Jennifer Thompson, PB
Corporate Office Solutions
(503) 740-2694
jtbiz@verizon.net

[Guest]

If the client's job site qualifies as a temporary job site, the mileage is likely deductible. You may consider having him charge the corporation for his mileage and let the corporation take the deduction, rather than deducting it as an Employee Business Expense. The mileage to and from his office is not deductible.

His lunches are only deductible if he is taking out clients, and/or he is considered away from home. There are some regs to handle this.

Since his client is likely going to include the reimbursement as part of his 1099, I would charge the travel expenses as an expense and the reimbursement as income.

Regarding the reimbursements, you must have been with a company that used an unaccountable system for reimbursement. As long as he is accountable for all reimbursements (with invoices), then it should not be included in payroll.

He can deduct the home office if he is self-employed. But, as a corporation, he can request reimbursement for use of his home, but he will need to recognize the income personally, and then offset it with depreciation of the home office. It usually doesn't work out as well.

For more information I refer you to publications 587 and 529 for more information. Also, you may want to look into Universal Accounting Center's new Professional Tax Preparer Program that's slated for production in the next two weeks.