Can I take Travel Per Diems as a Business Owner? | Mark J Kohler

Hey, if you're a business owner, you're looking for the maximum tax write off for your travel, meals and lodging when you're off doing business. Well, the per diem's is a unique strategy that not a lot of business owners know about because, well, when you work for a big corporation, they say, well, we'll give you the per diem rate when you go travel for the company. And that's a set figure. Well, if you spend less than that, the company still gets to write off the larger amount and may reimburse you for the larger amount. Depends on your relationship when you work for a big company. But when you're a business owner, you still want to know the options for per diem's. Let's break it down. All right, let me give you an example of what a per diem is so it'll make more sense as we go through the details. A per diem is a set amount you're allowed to write off even if it cost you less for lunch. For example, I go to Los Angeles for business, get off the plane and I hit In N out burger, double double animal style protein, my favorite, and it only cost me 10 bucks. But the GSA, that's a government agency, gsa.gov if you want to learn more about these per diems that are established, they may say the average lunch in LA is $25. Well, I only spent $10. Well, I get to write off the greater amount because that's the per diem allowance and that's what a per diem is. Now let's see how it figures out with travel and meals and as a business owner. Now next, we need to understand the 100% versus 50% rule, which means when you're eating out, traveling for business, you still take a 50% haircut. The IRS said you had to eat anyway. So you keep track of the bar tab and the food and the tips and then write it all down, put it on that meals line when you're traveling and then your account is going to cut it in half, which is cool. Now travel, if it's 100% business, travel trip, and I'm not taking an extra week to surf it down at San Onofre, my favorite surf spot in Orange county, then I'm there for business only. I can write off 100% of my travel expenses. Now let's break down travel a little further when it comes to per diems and I'll get right to it. Travel could be transportation. So think of your Uber and your airfare and all that, that's the transportation portion. So Uber, airfare and taxi and yada yada yada. So that's kind of this, this piece here. Now this other piece over here is going to be our lodging. And lodging per diems also take place and they're there on the GSA website. Meals also have per diem's so we're going to be looking at lodging, per diem's and meals per diem's. That's where we want to break it down for business owners. And this transportation thing is really a percentage based on the amount of the business trip being business. Now I've got a travel YouTube video that's awesome. Go over them, follow that. Because I break down a week's time and if I'm there 50% of the time for business and 50 per personal, I'm going to have a different write off for some of these transportation expenses. Whole other topic, not anything to do with per diems. So let me say this right off the bat. There's no per diems for what an average Uber fare is or an average airfare. It is what it is. You just have to figure out was the trip 100% business, 75% business or whatever. So there's no per diem's when it comes to the actual transport transportation costs. But they do have per diems for lodging and per diems for meals. Now I'm usually the type of guy that likes to give good news first, butter you up, then give you the bad news. So let's do that. Meals, you get to use per diems as a business owner and I'll give some examples here. Lodging you don't, they just don't allow it. If you're a 10% or greater owner the company, you don't get to use the per diem amounts. And for my business owners that are S corporations, which should be 99% of you for your business, not your rentals. And if you don't know that Strategy, go to YouTube and type mark Kohler S corporations and it'll blow your mind. Very, very important strategy. But if you or your spouse are owners of an S corporation greater than 10%, you're not allowed to take lodging per diem's. So if you go sleep on the couch at grandma's for the business trip, you don't get to take the write off of $110 for the average hotel just doesn't. It's not allowed. But we are allowed as business owners, like I said, to take average dining per diem's and let's talk about it because I think there's a lot of options here that could save you a lot in taxes. Now to zoom in on per diem's, we need a whole page to do it. So let's get over here. And I want to compare the GSA.gov website for meals and incidental expenses for when you travel to. Let's compare New York, New York to Phoenix or Scottsdale, Arizona. And they're in the same line when it comes to gsa. So I'm going to say Scottsdale. Let's kind of think about that. Now, if you've ever been to Scottsdale, Arizona, it is pretty swanky. And it's good to see a lot of these grandpas traveling with their granddaughters. They're just really affectionate. I don't know what that is. But anyway, that's a whole other story. Okay, so Scottsdale is swanky, pretty ritzy, and shockingly enough, now I've written down these numbers from the GSA.gov website in New York. They say the average meals for breakfast, lunch and dinner is $76. Okay, that's, that's your average. Now if you can go cheaper than that, you can still write off $76 for Scottsdale, Arizona. Are you kidding me? $56. Now, if you've ever been to Scottsdale, Arizona, that's pretty slim pickings. All right, now let's. Now I kind of like this New York one. Because if you travel in New York as a business owner on a regular basis, the day you're traveling, the amount is $57. Then you're in New York for the day doing business and then the day traveling back is another $57. So if you do a three day trip, you've got bing, bing, bing. And you could add that up and that's your meals for the whole trip. You don't have to worry about receipts. You just say, I went to New York for business, flew in, did business, flew back, three day trip, there's your write off for meals done. And you could tell your accountant, Yeah, I did five or six or 10 business trips to New York in my S corporation or even in my LLC to go check on my rental property. And those are my meals, expenses. So what I kind of like to think of is when I go to New York, I even added this up just for an example. Let's say I do breakfast, a rock star and a banana. That's kind of normal for me. And I've even got my rock star recovery here, look at 10 calories, B vitamins, taurine. Good stuff. I mean, this is good. No sugar with a banana. Breakfast. I came up with $8. Then I go on the street of New York. I'm going to do two slices in a soda. If you're on the streets of New York, you know, you got to hit a couple slices. And if I'm feeling healthy, I'll even do a bottle of water with two slices. Okay, so I'm looking at about 10 bucks for two slices in a soda. Slices, A couple bucks. Gotta love it. Nice couple cheese slices, fold them in half. If you really know what you're doing, then for dinner, I'm gonna hit a deli. I love the New York delis. I'm gonna hit a deli. They sometimes have a buffet bar. I can fill up something or I can get a sandwich. Let's say, worst case scenario, I'm out 20 bucks at a deli. Now, this is me because I'm cheap and I love New York. Eating on the streets, I 20, 30, $38. Now what's my write off? 76. Because I go with the greater of the two. I don't have to worry about receipts. I can go cash, and boom, 76 is my write off in New York. Now let's do Scottsdale. Okay, Now, Scottsdale, it's $56 a day, and it's $42 a day for your travel days. So if I'm flying into Scottsdale, Phoenix area, I get 42 for my day of travel, 56 for my day of food, and then another 42 for my day of travel. And frankly, I'm flying through airports and I just don't eat as much. And it's airport food, too. So I'm like 42. 42. But then I'm in Scottsdale. Now, here's the problem with Scottsdale. When I'm in Scottsdale, I'm definitely getting a breakfast burrito. Some of the best southwestern breakfast burritos are going to be in Scottsdale. And if I get a rock star with that, I'm out 15 bucks. Well, then lunch. You know, I'm doing some street tacos, and I'm going to probably get those at a little cafe with some guacamole and chips. Some of the best in Scottsdale down there. So I would at least be 20 for lunch, then dinner. Oh, my favorite restaurant on the planet is Mastro's City hall down in Scottsdale. And if you've been to Scottsdale, you haven't been there. You got to Go there and you know what I'm talking about. Lobster. Lobster potatoes. The best lobster mash potato. So it's mastro City hall. I'm not getting out of there for under 80 bucks, but it's going to be good. So. And some of you might be doing the wine and the bar tab before you're going all out at City Hall. So 80, 115 bucks. What? Well that's Scottsdale for you. So $115 versus 56. I'm taking the actual and I better keep my receipts. Take pictures of them on your phone, which are fine, but in New York I'm going per diem because I'm going to be eating slices on the street and hitting the delis. So these are your two strategies when it comes to per diem. You want to take the per diem whenever it's higher or the actual whenever it's higher and keep your receipts. Now again I want to reiterate meal per diem for business owners are sweet, but lodging not allowed to take. So you want to take your actual and again I'll use them. You could go to New York and stay at the Plaza, spend three or four hundred dollars a night, go to Scottsdale and find the cheapest Howard Johnson for 80 bucks a night. It's your actual lodging that's the write off. Doesn't matter how swanky the hotel is because you're not allowed to take the per diem's so you can go cheaper spending whatever you want. And if it's again 100% business trip, I'm going to be taking the actual lodging expense and 100% of my travel and Uber and tips and all those goodies. So maximize your write offs as a business owner. I think you're going to love it. And check out the following because I want to make sure you get more videos and updates on a regular basis.

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