How do I enter as a deduction Per Diem that is included in income on my 1099?

[bumbacat]

I understand that per diem is not taxable (when under Federal guideline amounts).  But the 1099 that I received has that amount included as income.  On my tax return, how do I label it?  It cannot be meals, since that the amount entered under meals would be reduced to 50%.  Please help.

[Anonymous_]

See https://www.irs.gov/pub/irs-regs/perdiemfaq%26a.prn.pdf

You might want to see if you can get a corrected 1099 from the issuer (assuming you followed the correct procedure).

[DavidD66]

There is a per diem rate for combined lodging and meal costs, and a per diem rate for meal costs alone. An employer may use either per diem method for reimbursing employee travel expenses. A self-employed person can only use per diem for the meal costs associated with expenses incurred for travel away from home.  For income reported to you on Form 1099-NEC, you are self-employed.  The amount of income you report on Schedule C is the total amount of non-employee compensation reported on Form 1099-NEC, which includes the per diem.  You then report your expenses on Schedule C.  For meal expenses incurred for travel away from home you can use the per diem rate, or your actual expenses.  For all other expenses such as mileage and lodging, you report the actual expense.  If you use the per diem rate for meals, you report it as a meal expense.  

The standard meal allowance is the federal M&IE rate. For travel from January 1–September 30, 2021, the rate for most small localities in the United States is $59 per day, and $64 per day for travel on or after October 1, 2022.  Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances.  You can find this information (organized by state) at GSA.gov/travel/plan-book/per-diem-rates

For more information on a temporary 100% deduction for food or beverages provided by a restaurant paid or incurred after December 31, 2020, and before January 1, 2023, refer to Notice 2021-25PDF. For more information on a special rule that allows the temporary 100% deduction for the full meal portion of a per diem rate or allowance, refer to Notice 2021-63

[Gabriel3001]

Every company prior, the W2 never included my per diem, just my hourly. The company hiring me as a consultant is offering x hourly and $140 per diem for all 7 days (I am out of state). With a 1099 am I obligated to pay taxes on it now? Or could I deposit the per diem amount into my personal account and the hourly into a business account as to avoid any mixing? I do plan on creating an LLC to help with write-offs but I could not wrap my head around this. I reside in Texas, but will be working in NC if it's relevant at all. I am below the Lodging and M&IE federal and state guidelines. Other consultants claim they don't pay taxes on per diem how is that possible.

[KrisD15]

No, you can't co-mingle funds. 

They don't pay tax on per diem because they write the amount off as an expense.

You're treated differently as an employee (W-2) than as Self-Employed (1099).

Since you are now working a a contract worker, you are Self-Employed. 

Since you did not setup an LLC or other business entity, you will need to file Schedule C.

Schedule C is part of Form 1040 but you will need to purchase TurboTax Home & Business (Desktop) or TurboTax Self-Employed Online to file.

Schedule C is where you will report your income as well as your expenses, like Meals and Travel. 

Because you're not an employee, you also pay your FICA tax (Social Security/Medicare) this way. 

If you are working/earning in North Carolina, you will need to file a North Carolina State return and pay tax on that income.

HERE is a link with more information

HERE is a link on North Carolina Filing Requirements