The summer is here, and many professionals are starting to wonder what they can deduct when it comes to their travel and entertainment expenses. Since the Tax Cuts and Job Act was passed, it has changed how and if you can deduct those expenses. The key to remember is, if you are an employee, meaning you receive a W2 from your employer and can itemize your deductions, you can no longer deduct these types of expenses. This being said, the following applies to self-employed individuals and small business owners.
For Business Travel expenses your trip must be entirely business related to be deducted. If you happen to have something that is considered personal within that travel, you cannot deduct that portion of the trip. Also, in another aspect, if you take a personal vacation and end up spending some of that time doing something business related, such as taking a client out to eat, you can only deduct the portion that is considered business.
As far as business travel outside of the U.S., if you spend the whole time on business activities, you can deduct the travel expenses. However, again, if you spend some of your time on personal activities, such as sightseeing, you must allocate your time between business and personal days.
When it comes to taking a client or a prospect to a sporting event, the theater, concerts, amusement parks, etc. including meals provided, you can still deduct these expenses if the main purpose of the entertainment was the active conduct of business.
The IRS covers both of the above-mentioned expenses in Publication 463.
Disclaimer. The information and examples in this article should not be considered tax advice. The new tax law is complex and every business situation is unique. Before you deduct any business expenses, check with A.Mazzo Accounting Services today.
A Mazzo Accounting provides a variety of tax and accounting services to individuals and businesses in the Wyomissing, Reading, West Reading, Sinking Spring and Kenhorst areas, as well as towns and villages around the Greater Reading area. Our services for small to mid-size businesses include taxes, payroll services, accounting services, and bookkeeping services. We also provide a variety of services for individuals and they include tax return preparation as well as some accounting assistance.