Tax Deductions (CONT’D FROM PAGE 1)
People | Knowledge | Software | Services
er helpful materials would be conference agendas with business-oriented sessions, a list of exhibitors who serve your organization, a catalog of relevant seminars (mark the ones you attended) and business cards and vendor bro- chures. What To Deduct Here is an important caveat: The ideas in this article are intended to provide you with initial guidance. You should always confer with qualified legal and accounting profes- sionals to make sure you deduct expenses properly. So what are some deductible expenses? Actual trans- portation costs are the most obvious. They can include travel by airplane, train, bus or automobile. Taxi or hired car travel during the trade show visit is also deductible. So are baggage costs, tips and what the IRS calls “ordinary and necessary expenses related to your business travel.” These might include rental fees for computers or other equipment. The Internal Revenue Service provides extensive guid- ance on the deduction of expenses in its publication Trav- el, Gift and Car Expenses. Visit www.irs.gov and search for “463.” For a complete list of deductible items in that publication see Table 1-1 on page 5. Additional informa- tion is available in another IRS document entitled Business Travel Expenses. Search the same site for “511.” In an attempt to assist the restaurant industry, the COVID-19-related Consolidated Appropriations Act, signed into law December 2020, made an important change to the deductibility of eligible meals during business travel. Such expenses are 100 percent deductible if incurred pri- or to January 1, 2023. (Previously the deduction was 50 percent). Note that meal costs are not deductible at all if the trade show is close to home. The IRS puts it this way in its publication Travel, Gift and Car Expenses: “You can deduct the cost of meals if it is necessary for you to stop for substantial sleep or rest to properly perform your du- ties while traveling away from home on business.” If your travel requires an overnight stay, then meals are eligible for deduction. On a related matter, the 2017 Tax Cuts and Jobs Act (TCJA) eliminated the deductibility of entertainment—an expense commonly encountered by businesspeople at- tending trade shows. “Loss of the entertainment deduc- tion has hit many businesses pretty hard,” says Flemming. “Some are rethinking how they court clients.” How about your own business: Should you still entertain customers even though you cannot deduct the bill? “You need to look at your return on investment,” says Flemming. “Does the expense result in more business because it encourages customers to return?” Careful Records Despite the elimination of the entertainment deduction, there are still many legitimate deductions available to busi- ness travelers. And while they certainly soften travel’s bot-
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