Maximize Tax Deductions (CONT’D FROM PAGE 24)
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 duties 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 deduction has hit many busi- nesses pretty hard,” says Flemming. “Some are rethinking how they court clients.” How about your own business: Should you still entertain customers even though you can- not 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 re- turn?” 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- tom line impact, keep in mind that the system only works if you record and retain the requisite backup documenta- tion. “Travel expenses, especially those for meals, are very CONTINUED ON PAGE 30
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 busi- ness travel. For tax years 2021 and 2022, such meals are 100 percent deductible. (Previously the deduction was 50
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