Can 1099-misc independent business consultant continue to deduct travel expenses if out of state project lasts for longer thn one year?

[ddwilkins671]

According to IRS topic 511- Business Travel Expenses: "Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you'll work there for more than one year, whether or not you actually work there that long."
Does this only pertain to employees or independent contractors as well? I have single client that per contract agreed to to reimburse travel expenses from my home 5hrs from project site ( hotel/meals) for life of project.  Phase 1 was planned to last less than 1 year. Project has expanded to multi-year status and will require me to spend 90% of my time on-site.  Will I have to pay tax on my travel reimbursement if project lasts longer than 1 year?

[Anonymous_]

@Mike9241 

[Mike9241]

IRS TAX TOPIC 511

You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you can't deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you'll work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for one year or less, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes.

[ddwilkins671]

Just to clarify I am a independent contractor with a contract with client that reimburses for expenses ( turn in an expense report every month with invoice for services) but has counted the expenses as taxable income because they were included on 2022 1099-NEC.  Project was set up in 2 phases : Analysis of viability and Build the Plant.  The first phase was supposed to be far less than a year and would not have continued to next step if not financially feasiable.  Client just made the decision to continue 16months ( Oct 2023) into project.  2022 taxes ( 6 months) into project I deducted 100% of my reimbursed travel expenses.  So are you saying that I can fully deduct my travel expenses up until June 2023 ( 1 year from start of project) or Oct 2023 when the project officially turned into a long term project?  If so either point after that I would lose deductibility of all travel expenses ( miles, meals and lodging) against the reimbursed dollars?

[Mike9241]

I have included a link to IRS PUB 463 which covers independent contractors who receive reimbursements. My prior thread assumed you did not. starts on page 32 

https://www.irs.gov/pub/irs-pdf/p463.pdf 

from the PUB

If the contractor adequately accounts to you for non-entertainment-related meal expenses, you (the client or customer) must keep records
documenting each element of the expense, as
explained in chapter 5. Use your records as
proof for a deduction on your tax return. If
non-entertainment-related meal expenses are
accounted for separately, you (not the IC) are subject to the
50% limit on meals. However, you can deduct
100% of business meals if the meals are food
and beverages provided by a restaurant, and
paid or incurred after 2020 and before 2023. If
the contractor adequately accounts to you for
reimbursed amounts, you don’t have to report
the amounts on an information return (IE 1099-MISC)

if they don't include the reimbursements on the 1099 you have nothing to deduct. while I'm not 100% sure, i would guess the one-year rule doesn't apply when you receive reimbursement based on submitting actual expense reports.  

[ddwilkins671]

Sorry for continued confusion. On 2 CPA websites it states 100% deductibility for "Meals included as taxable compensation to employees or independent contractors" and on page 12 of irs 463 it states:

Exception to the 50% Limit for Meals:
Your meal expense isn’t subject to the 50% limit
if the expense meets one of the following exceptions.
3—Self-employed reimbursed expenses.
If you are self-employed, your deductible meal
expenses aren’t subject to the 50% limit if all of
the following requirements are met.
• You have these expenses as an independent contractor.
• Your customer or client reimburses you or
gives you an allowance for these expenses
in connection with services you perform.
• You provide adequate records of these expenses to your customer or client. (See
chapter 5.)
In this case, your client or customer is subject to the 50% limit on the expenses.
Example. You are a self-employed attorney
who adequately accounts for meal expenses to
a client who reimburses you for these expenses. You aren’t subject to the limitation on meal
expenses. If the client can deduct the expenses, the client is subject to the 50% limit.
If you (as an independent contractor) have
expenses for meals related to providing services for a client but don’t adequately account for
and seek reimbursement from the client for
those expenses, you are subject to the 50%
limit on non-entertainment-related meals and
the entertainment-related meal expenses are
nondeductible to you.

So it looks like my client is limited to deducting 50% of the cost of the meal that he reimbursed me for and I, the independant contractor am able to deduct 100% . My client  reimburses me for meals when I am away from my personal home.  So I should be able to deduct 100% of the cost of meals that occurred while away from my home/tax home during the 1st year of project ie Jan - June of 2023? 

Again, I still have the question of  if/when does the project become infinite ie my tax home shifts from my personal home to the location where I am spending the majority of my work time .. the one year anniversary of project start(June 2023)  or 15 month(Oct 2023)  when it became apparent that project would continue for 2 more years? If and when the project becomes "infinite" do I lose all deductibility of meals , miles, and lodging resulting in payment of taxes on the meals, miles, and lodging reimbursement I receive from my client and he includes in the taxable income on my 2023 1099-NEC. ?