DNs with US tax homes, how do you deduct travel expenses?

First post here, so be gentle :smiley:

I am a half time digital nomad with a US tax home and tax season is coming up. Many of my travel expenses are legitimate business expenses and I’m sure others here have similar circumstances. I have a tax guy I’m generally very happy with and their advice is for me to deduct per diem meal & incidental expense (M&IE) rates as posted by the GSA for business travel days within the US, but actual M&IE for business travel days abroad since my out of pocket expenses beyond air / lodging tend to be much much lower while overseas. The logic seems solid, but it seems odd to approach deductions for domestic / international travel completely differently.

Generally, my nicer meals abroad tend to be either comped (press visits) or included in my lodging expense (hello executive lounge). I’m sure many other digital nomads fit a similar profile.

I’ve seen a number of resources that emphasize that spending less than the GSA/DOS per diem on meals and incidental expenses effectively gives you a free tax break for being frugal. For this reason (and despite my tax guy’s advice) I’m finding it hard not to claim the full per diem amount while overseas. I’ve been in some very expensive locations with very high per diem rates per the Department of State including London, Paris and Dubai that would make for large deductions .

My question for the other digital nomads here with US tax homes is: how do you handle deducting your business related travel expenses? If you were in Dubai on business for a full day and the Department of State per diem meal and incidental rate was $183 / day, but you only paid $20 for food and $10 for cabs - would you still deduct 50% of $183 for the maximum benefit? If another member of your business was travelling with you would you deduct 50% of $183 x2?

Unfortunately, I’m Australian tax accountant so I don’t know the specifics for the US. But I would imagine, depending on how you are structured (if you’re an employee or run your own company), you could potentially deduct up to the per diem rate, regardless of whether or not you have actually spent that much. Usually it’s if you want to deduct above the per diem rate, then you would need to have evidence of your expenses.

I believe you can mix and match to use the best option each day. IRS Publication 463 is the basic source of info. I’d also encourage you to be certain your “tax guy” has a JD and not merely a CPA credential - if you think an audit is in your future.

I’d look, also, at the “away from home” question and the issue of how your choice of entity impacts.

Good luck.

Lee