@AdamM1 wrote:
When I input the M&IE into the Meals 50% section, it reduces my expected refund compared to when input into Travel Expenses, so I assume it is very relevant where I file it?
I am also a little confused as I could have taken some or even most of my meals in restaurants, which would be filed in the Meals 100% section. When I input my M&IE there, I get the same refund as when they were input to Travel Expenses.
Long story short, I definitely would financially prefer to file as Meals 100 or Travel Expenses according to the TurboTax software, but I don't know if this creates an audit risk or is illegal.
This is a law change I just learned about.
The IRS has not released the 2021 version of publication 463 yet, probably for this reason. The instructions for Schedule C say this:
Enter your deductible business meal expenses. This includes expenses for meals while traveling away from home for business. Your deductible business meal expenses are a percentage of your actual business meal expenses or standard meal allowance. See Amount of deduction, later, for the percentage that applies to your actual meal expenses or standard meal allowance. In most cases, the percentage is 50%. However, business meals are 100% deductible if the meals are food or beverages provided by a restaurant and paid or incurred after December 31, 2020, and before January 1, 2023.
If turbotax is giving you a different deduction based on where you enter it in the program, the I assume the programmers took an inappropriate short cut and applied the new 100% limit to travel but not local meals (if they are entered separately) instead of adding a new question about restaurants. I can try and examine some of the internal worksheets at home tonight, if I remember.
In the mean time, if these were travel meals eaten at restaurants, you can enter them in whichever program location gives your the 100% deduction.
If audited, anyone can be asked to prove their deductions. In this case, you could be asked to prove you ate at restaurants. I can't tell you how likely this is, and I can't tell you if "well, my hotel room didn't have a kitchen so where else would I have eaten" will be an effective answer if you didn't keep proof. It's a new change so no one has been audited and the change probably hasn't even been written into the IRS audit manuals yet.
