Meal Expenses: Traveling For Work, Quickbooks Tips

When it comes to logging work-related travel expenses, QuickBooks Online is a useful tool for recording purposes. This is particularly relevant for meals and groceries, which are deductible travel expenses. To get started, create an expense account and input all your travel expenses there. You can also use the software to track your business travel expenses, including car maintenance, fuel, and other related costs. It's important to note that you can only claim meal expenses when they are directly related to your business activities, such as meals with clients or employees.

Creating a new expense account

To enter meals while travelling for work in Quickbooks, you must first create an expense account and put all your travel expenses in that account. Meals and groceries are part of deductible travel expenses. You can also upload your receipts to Quickbooks Online.

• Access your QuickBooks Online company.
• On the left navigational bar, go to the Transaction tab.
• Select Chart of accounts and then click the New button.
• In the Account Type section, choose Expense and complete the necessary fields.
• Once you're ready, click the Save and Close button.

Alternatively, if you are using QuickBooks Desktop, you can follow these steps:

• Select Lists, then Chart of Accounts or use the shortcut key (Ctrl + A).
• Select Accounts at the bottom of the window, then select New.
• Select Expense and Continue.
• In the Account Name Field, type the name of your expense account and then select Save.

You can also create sub-accounts for different categories of expenses, such as meals and entertainment. To do this in QuickBooks Online:

• Select the gear icon to the top right of your window or use the shortcut key (Ctrl + Alt + A).
• Under Your Company, select Chart of Accounts.
• Click the New button.
• Choose Expense as your “Category Type”.
• In the Detail Type field, select Entertainment Meals.
• In the Name field, type the name of your sub-account.
• Select Subaccount of: Meals & Entertainment.
• Click Save and Close.

Deducting meals and groceries

When it comes to deducting meals and groceries while travelling for work, it's important to note that tax laws are ever-changing, so it's a good idea to consult the latest IRS guidelines. That being said, here is some general information about deducting meals and groceries in QuickBooks:

Firstly, QuickBooks Online can be used for recording travel expenses related to your business. You can create an expense account specifically for travel and put all your travel-related expenses, including meals and groceries, into that account. It is recommended to consult an accountant if you are unsure which expense account to use.

Meals and groceries are considered deductible travel expenses. However, there are some restrictions on what qualifies as a deductible meal expense. For example, a meal expense can only be claimed if the meal was eaten with a customer or client. If your spouse is also present at the meal, you can claim your meal, your client's meal, but not your spouse's, unless they are also an employee or partner in the business. Additionally, meal expenses outside of your sales territory or on vacation are not deductible.

When it comes to recording meal expenses, there are two methods: detailed and simplified. The detailed method requires keeping receipts and claiming expenses based on the actual amount spent, which can be time-consuming but ensures an accurate deduction. The simplified method allows for claiming a flat amount for each meal, but it is still advisable to keep receipts in case of an audit.

To maximize your meal and grocery deductions, it is recommended to customize your chart of accounts to align with tax deduction categories. QuickBooks has a native expense account titled "Meals & Entertainment", and it is suggested to create sub-accounts labelled:

0% Deductible

50% Deductible

100% Deductible

These sub-accounts can be easily created in both QuickBooks Desktop and QuickBooks Online by following the steps outlined in the relevant sources.

Tracking mileage

Tracking your mileage is critical for tax purposes and has implications for your income and taxes. Here are some detailed instructions on how to track mileage:

Logging Your Mileage

Use a logbook to manually track the miles travelled for business purposes. Note the odometer reading at the beginning and end of the year, and subtract the final reading from the initial reading to find the total mileage for the year. This can be done using a dedicated notebook, a spreadsheet, or a mileage tracking app. Remember to keep all business records, including logbooks, for at least six years.

Calculating Business Mileage

To calculate the total miles travelled for business, add up the mileage from your logbook. Then, divide the business miles by the total miles driven to determine the percentage of time your vehicle was used for business purposes. This percentage represents the deductible portion of your total vehicle expenses.

Identifying Business vs Personal Miles

It is important to distinguish between business and personal trips. A mileage log should include the date, destination, purpose of the trip, odometer readings, and total mileage. This ensures that only the miles for business trips are tracked for tax purposes.

Using the QuickBooks Mobile App

The QuickBooks mobile app offers a convenient way to track mileage automatically. Simply download the app, log in, and enable location services. The app will detect when you're driving and categorize individual trips as business or personal, making it easier to rack up potential tax deductions.

Standard Mileage Method vs Actual Expense Method

There are two methods to calculate your business mileage deduction: the standard mileage method and the actual expense method. The standard mileage method is a simpler approach, where you multiply your total business miles for the year by the standard mileage rate published by the IRS. The actual expense method allows you to deduct vehicle-related costs if at least some of your driving is for business, and may result in a larger deduction.

By tracking your mileage and expenses, you can choose the method that provides the greatest tax benefit. Additionally, using a mileage tracking app like QuickBooks ensures real-time recording and organization of your mileage data, making it easier to claim your mileage deduction during tax season.

Receipts and proof of purchase

Keeping a record of your expenses is essential when it comes to backing up the deductions you plan to claim at the end of the year. This is especially true for meal expenses, which can be deducted as long as the meal was eaten with a customer or client.

To record your meal expenses, you can use either the detailed or simplified method. The detailed method requires you to keep receipts and claim your expense using the actual amount spent. This method ensures you get the exact deduction you are entitled to, but it requires significant work to detail your expense totals. The simplified method, on the other hand, allows you to claim a flat amount for each meal, but it is still a good idea to keep your receipts in case of an audit.

To make the process of recording your meal expenses easier, you can use a shoebox or file folder to hold all your receipts, or make all meal purchases with one specific credit card. A credit card will provide you with a detailed list of all transactions, making tax time easier.

Additionally, you can upload your receipts to QuickBooks Online. To do this, go to the Intuit Order Status site and enter your last name, phone number, and the last four digits of your card number. Click "Get Status" to view your receipt. This will allow you to see up to the last three months of your payment history. Alternatively, you can find your receipts within QuickBooks by clicking the Gear icon, selecting "Account and Settings" under "Your Company", and then selecting "Billing & Subscription" from the left menu. From there, you can click the "View payment history" hyperlink and filter by Event or Date Range if needed.

It is important to note that if you are on a business trip, you can only claim expenses directly related to the trip, such as lodging and plane fare, but not meals.

Tax deductions

Meals and travel expenses are tax-deductible, but there are rules to follow. Firstly, the trip must be for business purposes and meet certain criteria. The trip must be longer than a day, with the majority of the time spent on business. It must also be limited to "ordinary and necessary" expenses, and it's a good idea to document trip plans in advance.

When it comes to meals, you can deduct 50% of the cost. This includes meals with clients or business associates, as well as meals eaten alone while travelling for business. The cost of meals for spouses, children or other dependents is not deductible unless they are employees travelling with you for business purposes. Meals must not be "lavish or extravagant", and it's important to keep records of expenses, including the date, amount, place and business relationship of those in attendance.

Other deductible travel expenses include transportation, shipping and baggage, lodging, communication costs, and dry cleaning and laundry.

Frequently asked questions