Some jobs require employees to work longer than a regular eight-hour shift. Examples include doctors, firefighters and day-care providers. When an individual works more than eight hours, compensation issues can arise. The most common question is whether expenses incurred during these longer shifts can be deducted as ordinary and necessary business expenses. The Internal Revenue Code and case law allows deductions in certain circumstances.
Ordinary and Necessary Business Expense
Internal Revenue Code section 162(a) allows a deduction for all ordinary and necessary business expenses incurred in a year, including a reasonable salary, travel expenses including food and lodging and rentals or other payments for property used in the business. This means that employees working a 24-hour shift should be entitled to deduct food or lodging expenses that arise as a condition of their work.
Meals Furnished by Employer
In some circumstances, the employer will furnish meals and lodging to his employees as part of a 24-hour shift. In these situations, the meals and lodging become part of the compensation and fall under Internal Revenue Code 119. This states that the value of these meals and lodging shall be excluded from the employee's gross income. The meals must be furnished on the business' premises and the employee must be required to accept it as part of his employment.
In Silba v. Commissioner of Internal Revenue, 611 F.2d 1260 (1980), firefighters attempted to deduct from their incomes their share of expenses from mandatory meals at firehouses where they worked 24-hour shifts. The IRS denied their deductions and they appealed. The tax court found in the firefighters' favor. The Ninth Circuit Court of Appeals held that the firefighters had the choice to either deduct these expenses or exclude them from their gross income.
The IRS has taken a narrow view of whether employees can deduct food expenses from a 24-hour work shift. Under Internal Revenue Code sections 162(a) and 119, the IRS wants to see that the employer had direct control over the employee's meals. If the IRS determines that the employee had any control in his choice of food or place to eat, the agency will try to deny the deduction.
- U.S. Code: Section 162: Trade or Business Expenses
- Onecle: Other Business Expenses
- Justia.com: U.S., Law: 611 F.2d 1260: Richard R. Sibla, Petitioner-appellee, v. Commissioner of Internal Revenue, Respondent-appellant.robert E. Cooper, Petitioner-appellee, v. Commissioner of Internal Revenue, Respondent-Appellant
- Tax Almanac: Meals or Lodging Furnished for the Convenience of the Employer