Tax Law (Questions About Taxes)/Per diem

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Question
I am an independent insurance adjuster working in Texas for an adjusting firm.  I live in North Carolina in August 2012 I was offered an opportunity to come to Ft Worth, TX and work as a desk examiner for an insurance company here. This position is a temporary day to day assignment (we literally can be let go any day and some have been). We do sign a contract but it specifically indicates that we are working on a day to day basis and we are paid per day. A portion of our daily rate of pay is given to us as per diem (the amount of per diem is the IRS rate for Texas). I am paid with a 1099.  I understand that the per diem may not be subject to being taxed.  With that being the case can I still make deductions for lodging and food since this is to be paid with the per diem?  
I will have extensive lodging and food expenses. So would it be more beneficial for me to not report the per diem or report all the 1099 and the per diem amounts as income on the schedule C of my tax return and then deduct the expenses.

Answer
Michelle,

If the assignment is for more than 12 months or is of an undetermined duration, the per diem amounts are fully taxable.  In this case, the expenses would be deductible.

If the interpretation is that the assignment is for a fixed period of less than 12 months, the per diem is not taxable.  Any expenses incurred in excess of the per diem amounts are deductible.

Hope this helps.

John Stancil, CPA  

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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