Tax Law (Questions About Taxes)/contractor deduction

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Question
Hello and thanks for donating your time and expertise.

I have a very small business and only hire independent contractors - frequently, I will hire some and pay them $X plus lunch for a day's work.

I would like to be able to deduct the meal expense as a regular labor cost since lunch is part of the compensation and not entertainment.

Do I simply add the cost of the meal to the $X I pay them?

In other words, if I offer them $100 plus lunch to work the day and lunch is $12, can I simply claim $112 as a labor cost?

Thank you

Don

Answer
Don,

Thanks for your question.

That depends. If you report the amount paid and the lunch on the 1099-MISC you give the worker, you would include the full amount of the lunch. In this case, you should indicate that $12 (or whatever amount) is included in the number as meals.This allows him to treat it properly on his taxes. If you don't report the lunch on the 1099-MISC you can only deduct half the lunch. Any lunch amount on the 1099 does not have to be on the actual 1099 itself.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

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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