I started a new consulting business in August 07. Under my contract my payer also reimburses me dollar for dollar for my meals and travel expenses. When I received my 1099MISC my consulting fees, meals and expenses are all included as one amount in box 7. I understand that I can claim the mileage as a deduction and it will be a wash so I don't have to pay taxes on the mileage reimbursement. However, as I understand it I can only claim 1/2 the costs of meals. If this is so, then I will have to pay income and self employment tax etc on the other 1/2 of the meal for which I was reimbursed. Is this so, or am I missing something?

Unfortunately, you are correct, the 50% that is disallowed will be included as part of the self-employment income subject to S/E Taxes.

I have found that many IT consultants negotiate with their employers to pay them separately for the reimbursed expenses provided that you make available to them an accounting for these expenses, by providing actual receipts.

I think this is better strategy to pursue for 2008.

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