Generally, daily travel from your home to your regular place of business is considered a nondeductible personal commuting expense. However, the IRS says that if you have a regular place of business away from your home, you can deduct daily travel from your home to any temporary work location even if the work location is within the metropolitan area in which you live. The IRS says you are considered traveling to a temporary work location if you realistically expect your work assignment there to last for one year or less.
No receipt is required for meals and entertainment expenses of $75 or less. However, you should maintain records or compose a list each year noting:
- Who you entertained.
- Where you entertained them.
- What business was discussed.
- The cost of the entertainment.
Using this list, you can deduct 50% of the cost incurred. The company should reimburse you by company check for any business meals or entertainment you pay out-of-pocket.
Business people who look for a way to deduct more time at the golf course, tennis courts or at sporting events, may want to consider taking clients and customers along. Such outings can help cement business relationships and taking a client or customer along can provide a way to help subsidize your expenses. Business entertainment expenses are 50% deductible. To deduct entertainment expenses, the tax law requires that a substantial and bona fide business discussion take place either before, during or after the entertainment event.
As with any entertainment expense, the expenditure needs to be properly documented by receipts, who was entertained and a brief description of the discussions that took place.
Most meals and entertainment expenses are only 50% deductible. However, expenses related to social events primarily for employees, such as food and beverage at a Company picnic or Christmas party are not subject to the 50% rule. Be sure to break these costs out in your financial records so that the full amount is deducted.
The Company may deduct travel, lodging and 50% of meals incurred in attending a convention or seminar in the US that benefits your business (excludes investment, political or social events). The primary purpose of the travel must be attending a business event. For example: if a business event lasts 4 days and you extend the stay 2 personal days, the primary purpose of the trip is business and you can deduct all travel, lodging and meal expenses for the 4 days. Generally, expenses for spouses and dependents are not deductible. (Expenses would be deductible if they were Company employees and there was a business purpose for them to attend the business event). Recreation and entertainment expenses on the trip are generally not deductible. For record keeping purposes, we suggest you charge your business expenses to a Company credit card and pay nondeductible expenses in cash or with a personal credit card. A schedule should be made of the business days attended, including event hours and personal days. Remember to separate meals and entertainment from other expenses since they are only 50% deductible. In order to make the most of travel where pleasure is involved, schedule a business trip which is part personal over a weekend. By working on Friday and Monday, you can now deduct the lodging costs and 50% of the meals for the entire trip, including the weekend. What previously would have been nondeductible personal costs become deductible. Conventions and seminars outside the US require more documentation to be tax deductible. If you questions concerning business and pleasure travel, please feel free to contact us.