4. Accurate and Adequate Records<\/div>\n
The most important thing to have in order to make successful deductions for entertainment expenses are good records. \u00a0It is recommended you maintain a log or diary to record your business entertainment expenses. \u00a0If the expense is more than $75, you also need restaurant checks, hotel bills and other receipts to substantiate the amount you’re claiming.<\/div>\n
4 Keys to Making Entertainment Expenses Tax Deductibles<\/p>\n
In business, it is common for you to entertain your clients or potential clients. \u00a0This may include taking them out for meals or other social activities. \u00a0But if you think you can claim deductions on all your business entertainment expenses, you\u2019re wrong. \u00a0You can only do so when your expenses meet certain criteria according to IRS Publication 463, Travel, Entertainment, Gift and Car Expenses
\nHere are 4 keys to making successful tax deductions from your business entertainment expenses.
\n1. The 50% Rule
\nThe IRS only allows half of your expenses to be deducted according to the Tax Code. \u00a0In addition, the IRS will also use its discretion as to whether to limit your deductions further considering the line of work you\u2019re in and where your company is located. \u00a0If the IRS feels that the expenses you incurred is too lavish based on your line of work and company location, it has the right to lower your deduction to below 50%.
\nThis 50% rule also applies to business trip entertainment. \u00a0If you entertain while traveling, your accommodation and airfare are fully deductible, but only half of your entertainment expenses can be claimed.
\n2. The Purpose for Entertaining
\nIf you have business associates who are your friends, you might meet up for a meal just to catch up with each other, share the latest news in your industry or compare notes. \u00a0All these purposes are not acceptable purposes to claim entertainment expenses deductions.
\nAccording to the Tax Code, the main purpose of the entertainment must be \u2018the active conduct of business.\u2019 \u00a0And you must have \u2018more than a general expectation of getting income or some other specific business benefit at some future time.\u2019
\nThe exception to this rule is where you entertain before or after a business meeting. \u00a0If you bring a client out for dinner after making a business presentation to him, then your entertainment expense is deductible even if you do not discuss business over the dinner.
\nIf you bring along your spouse or your client\u2019s spouse, your spouses\u2019 expenses are not deductible unless your spouses are essential to the business discussion.
\n3. Other Social Events
\nIf you take your client out to the theater, a sports function or other social event, the same rules apply. \u00a0The exception to this is when the event is for charity. \u00a0Then you can deduct the full amount.
\n4. Accurate and Adequate Records
\nThe most important thing to have in order to make successful deductions for entertainment expenses are good records. \u00a0It is recommended you maintain a log or diary to record your business entertainment expenses. \u00a0If the expense is more than $75, you also need restaurant checks, hotel bills and other receipts to substantiate the amount you’re claiming.<\/p>\n","protected":false},"excerpt":{"rendered":"
There's the version of tax resolution the late-night commercials sell you. Then there's how it actually works. I'm Darrin Mish, a Tampa tax attorney. I've spent 32 years on the inside of these cases. Here's the real version. 4 Keys to Making Entertainment Expenses Tax Deductibles In business, it is common for you to entertain […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[4],"tags":[],"class_list":["post-17538","post","type-post","status-publish","format-standard","hentry","category-irs-help"],"_links":{"self":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/comments?post=17538"}],"version-history":[{"count":1,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17538\/revisions"}],"predecessor-version":[{"id":21946,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17538\/revisions\/21946"}],"wp:attachment":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/media?parent=17538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/categories?post=17538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/tags?post=17538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}