There's a place on the Schedule C for meal expenses, so that must mean I can claim them as a business deduction when I'm delivering for gig apps like Doordash, Grubhub, Uber Eats, Instacart and others, right?
Right?
So, CAN I claim meals as a business expense or deduction while delivering these for gig apps? No. Meals you eat while delivering are considered personal expenses, not business expenses. They do not meet any of the requirements for claiming them.
But then why does the IRS have a place where you can list your meals?
There are times that the tax code allows a business to write off meals.
However, you have to understand the default. Meals are a personal expense. That is where it begins. That will be the ruling unless there are special circumstances.
If you are a football fan, think of it this way. It's like when a ruling on the field has been challenged. When they review the play, they start with the assumption that the ruling is correct. Unless there's a clear reason to change the ruling, the ruling stands.
In the same way, your meal expense is a personal expense unless there's a clear reason that you can show it relates to your business. These are the circumstances that you can claim a meal:
When the meal is a necessary and ordinary part of the operation of your business.
When the meal is something a business provides for its employees in certain circumstances.
One thing to notice is that these two involve providing meals for someone else.
A third allowance is made when the meal is part of business travel.
Can I Claim a meal deduction because it is a necessary and ordinary business expense while delivering for Grubhub, Doordash, Uber Eats, Instacart etc.?
The general rule where the IRS is concerned is that an expense has to be necessary and ordinary for your particular business to be claimed. You can read more about how that applies to business expenses for gig workers here.
What does that mean?
It means it has to be related to what you do as a business. There has to be a business purpose. It has to enhance your business in some way.
Think about what delivery work entails. It's picking up the delivery item from one place and delivering it to another. Your clients are the gig companies, which means you won't be taking them out to dinner.
Okay, but doesn't keeping yourself nourished so you can keep delivering count as enhancing your business? Keeping yourself in the condition to form your work is your personal responsibility, no matter the job or business, so unfortunately the default remains, it's a business expense.
Further definition of ordinary and necessary
Loopholelewy provides a good explanation of how or when you can claim a meal. It summarizes the circumstances when a business meal based on IRS Notice 2018-76.
LoopholeLewy puts all the IRS speak into ordinary English in their article. They explain that 50 % of meal costs CAN be deducted, but ONLY under certain circumstances. All of them have to be met including:
The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact.
Requirement for claiming a meal expense as explained in LoopholeLewy.com
An appropriate business contact has to be involved.
In other words, a meal that you provide for yourself doesn't count. (However, this does allow for a possible exception that we'll cover later).
I'm self employed, so can I claim a meal that I provide for myself (my employee) as a business expense?
The IRS makes some allowances for a business providing meals to their employees if the meal is furnished on business premises and for the convenience of the employer.
Okay, so your car is sort of your business premise, right?
The problem with that is that you are not an employee. Even though you are self employed, you are still not considered an employee. You do not submit payroll taxes (self employment tax is NOT payroll tax) and don't run an actual payroll.
Even if you incorporate and put yourself on payroll, if you own more than 2% of the business you cannot claim yourself as an employee.
But businesses can claim that meals are part of compensation – can't I claim my compensation for myself as an expense?
IRS publication 463 states that meals can be deducted 100% if they are provided as compensation. So couldn't I claim that my meals are compensation?
We're reaching now.
To begin, the same thing stated above still applies. You cannot claim yourself as an employee under any of these things.
But here's the other issue. Even if you could make such a claim, you then have to report that as income. So yeah, if you had a thousand dollars of meal expenses, you also have a thousand dollars extra income to report. It comes out as a wash, so what's the point?
Okay, but I travel, so can't I claim my meals as part of my travel expenses?
What if I drive to another town to do my deliveries for Grubhub, Doordash, Uber Eats, Instacart or any of the others? Isn't that business travel? Can't I claim my meals because of that?
Especially if I live near the state line, and I go to another state?
Publication 463 gets into that as well, defining travel away from home. It's only allowable to claim travel away from home if you meet both of these tests:
- You have to be away from your tax home for longer than a normal work day, AND
- You need to sleep or rest as part of that being away.
They give an example that helps clarify, in talking about a truck driver:
Example – You are a truck driver. You leave your terminal and return to it later the same day. You get an hour off at your turnaround point to eat. Because you aren’t off to get necessary sleep and the brief time off isn’t an adequate rest period, you aren’t traveling away from home
IRS Publication 463 explanation of travel from home.
Put simply, what we do doesn't qualify as travel from home.
Are there any exceptions, where I CAN claim meals as a business expense deduction as an independent contractor for Doordash, Grubhub, Uber Eats, etc?
There may be times where you could claim a meal. For what we do, it's rare. It certainly doesn't involve your day to day meals that you eat while out delivering.
Remember that it has to be necessary and ordinary for what you do. There has to be a business purpose to the meal. Here are a few examples:
Recruiting another courier
A lot of gig companies offer referral bonuses. Say you take a friend out for coffee or lunch to talk to them about the benefits of driving.
That meeting has a direct business benefit to you. It increases the possibility of additional income because of the referral bonus. In that instance, you can claim 50% of that meal cost.
If you get together with a group of drivers over lunch to share ideas on how to increase earnings, or to discuss issues related to delivery, that has a business purpose. It helps you improve your business or helps you avoid problems with your business. You can claim 50% of your cost for that meal.
If there's ever a conference for gig workers and you have to travel overnight for that meeting, your travel and meal costs can be claimed. Again, the IRS limits you to 50% of the meal cost as a business deduction.
What to do when the expense is allowable.
The IRS requires a record. It has to be more than just the receipt.
The best practice is to write information down on the receipt. Make a note of the business purpose of the meal. If you had a meeting with someone else, who did you meet with and what was discussed? If you were travelling, what was the business purpose of the trip?
The bottom line
Don't take chances trying to save money on a business meal expense deduction that you can not claim as an independent contractor for gig companies like Grubhub, Doordash, Uber Eats, Instacart or other such apps.
When you file your taxes, you have to enter the type of business you are doing. The IRS knows the different normal expenses for similar businesses. They understand that meals are not an ordinary or necessary expense in what we do.
A large deduction in this area can be a big red flag for their computers. It's the kind of thing where you can be flagged for someone to take a look, and if they need more information (or proof) it can set you up for an audit.
Stick to the things that are an actual part of running your business and you keep yourself out of trouble.
