New Job (independent contractor) as a Restaurant Critic - how to report

[caroleena5]

I have 2 related questions.

This year, I began a side gig as a restaurant critic.  I am an independent contractor for a restaurant chain, and they pay me to evaluate the food and service in 8 locations.  They have sent me a 1099 for all of the expenses they have reimbursed (each time I review a restaurant, I submit an expense form for the cost of the meal plus any parking costs).

My questions:

1. In turbo tax, do I create a business for reporting purposes?  If so, I cannot find a code resembling what I do, so shall I choose the option with all 9's?
2. How can I indicate that the meal expenses are my job?  In other words, how can I deduct 100% of the meals instead of 50%?  The meals are not simply a business expense....they ARE the business.

Thanks in advance for your help!

Carolyn

[RobertG]

Yes, you would create a business for reporting purposes.

The business code is just used by the IRS for statistical purposes, it does not affect your taxes, so if you can't find a code, just use the code with all nines.

As for claiming 100% of the business meals, Internal Revenue Code section 274 allows taxpayers to deduct 50% of an otherwise deductible business meal. I can find no authority that would allow you to deduct it at 100%.  The theory behind the 50% rule is that since you have to eat anyway, half the cost is personal.

[caroleena5]

Thanks.  I'm not sure this is correct, though.  When I took this "job," I remember looking it up after the training, where they told us 100% of our reimbursed expenses would be deductible (training was in September 2019, so after tax laws changed).  Somewhere I was able to find an exception to that 50% rule....if the job was directly related to dining.  The article even had examples, such as a food blogger or restaurant critic.  Unfortunately, now that it's time to file my taxes, I can no longer find that article.  Yes, I have to eat anyway, but I don't have to eat at five star restaurants, and I don't normally order as much food as I'm required to order to write my reviews.

I'm familiar with the tax law you mentioned, but I was hoping someone might be able to direct me to the specific exceptions and how to report them.  I wish I'd bookmarked the article I found.  I remember having to dig a little deeper than just googling.

I don't earn money from this "job," which is why I'm not sure I should be classifying it as a business, from the articles I've read.  My intent is not to earn a profit, and I don't.  I earn a tiny stipend for each job, plus full reimbursement for my meal and parking expenses.  By the time I factor in the gas it takes to travel to the restaurants, it is pretty much a wash with the stipend.

Hope that clarifies my question a bit.  Thanks so much for your help.

[ColeenD3]

If you do not have a profit motive, then this is considered a hobby by the IRS. You can't deduct expenses from your hobby any longer; the TCJA completely eliminates the itemized deduction for hobby expenses, along with all other miscellaneous itemized deductions

Please see this link for more information. Hobby vs business

[caroleena5]

Perhaps I wasn't clear.  I am paid a stipend plus expenses.  I am an independent contractor paid by the company that has hired me to do this work. They sent me a 1099-misc for all of the reimbursement/stipend checks.  I was told in the training that the expenses were 100% deductible and the stipend would amount to less than the $600 required to pay taxes.  I am just trying to determine how to report the 1099-misc and how to deduct the amount that was for expense reimbursement (for meals and parking).  The 1099-misc was for about $1300.

[ColeenD3]

"I don't earn money from this "job," which is why I'm not sure I should be classifying it as a business, from the articles I've read.  My intent is not to earn a profit, and I don't."

As stated above in a previous answer, there used to be a provision to deduct 100% business meals, but that is no longer the case. Be sure any reference source is the IRS itself, since there is much disinformation on the internet. One such expert in a food blog states that they are 100% deductible for a food critic "in my view". He offers no substantiation.

Please see the following sources from the IRS.

Code 274

[caroleena5]

I guess where I'm struggling is that the job description is to eat in specific restaurants and order specific food.

I suppose I AM getting paid to do the job, if you count the stipend (even though I don't really think of it as profit since it's such a small amount, and it barely covers the gas money).

The meals are not "entertainment" or meeting with clients....or any of the other scenarios that are discussed in code 274.  There would be no job at all without the meals, and I'm simply being reimbursed for what I spend ordering the required items that I evaluate.

[LindaB1993]

Some meal and entertainment expenses may be fully deducted. That is, your deduction doesn't have to be limited to 50% on these activities: 

• If the meal or entertainment is an essential part of the business function, as with a restaurant critic, food blogger, or sports reporter. 
• If your business is audited, you may be required to give the IRS specific reasons and documentation (policies and job descriptions, for example) to prove that the meals were reported to and reimbursed by the the Employer.  It will probably be described fully in your contract.

[caroleena5]

This is exactly what I was looking for!  I knew I'd seen this before....can you please tell me where you found this?  Thank you so much!!