If you are running your own business, you may deduct a part of the cost of your meals and entertainment.
Entertainment Expenses – Are They Tax Deductible?
Entertainment for business purposes may include in general, any activities that provide recreation, amusement and entertainment.Any expenses for food, hotel, transportation, or for entertaining guests (business clients or potential business clients) at social clubs, sporting events, theaters and at other similar locations are tax deductible.
Meals And Entertainment Tax Deduction Documentation
In order to be eligible for this tax deduction, you have to show evidence of your expenditures, including receipts, and other support for your business related expenditures.To deduct an entertainment related meal or any other expenses for gifts, entertainment, travel, etc, you must prove evidence of an expenditure receipt of $75 or more.You cannot claim the cost of those expenses twice on your tax return. You may choose to report them as travel expenses or claim them under the entertainment expense category.When claiming your business expenses, you need to make sure you have receipts or other documentary evidence, including the name of any restaurant, the amount spent and the date. You need to specify the relationship with your guest, mentioning the possibility of engaging them in the active conduct of your business.
Which Business Expenses Are 100% Deductible?
Business transportation expenses are 100% tax deductible.Qualified business expenses including meals, tickets for events where business is discussed, are 50% tax deductible.There are certain meals and entertainment expenses fully deductible.Those include:
- Expenses for goods, such as customer samples or promotional offers for to the public.
- Expenses for goods, services that are treated as wages to the recipients.
- Expenses reimbursed under an accountable plan.
- Expenses provided by your employer, for recreational and social activities.
- Expenses for foods and services. Those are excluded from the recipient’s income under the “minims fringe benefit”.
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