Halle Penner, Sydney Klassen, Mena Peach, Rachel Powell, Megan Davidson, Kylie Milliken, Rachel Beck, Cassandra Romo, Esmeray Demirbas, Sienna Clark, Jayda Mc Donald, Statia Burchart, Christina Yang, Brooklyn Sawatsky, Keenan Dunphy, Mathew Roosdahl, Elise Dalzell, Grace Klassen, Gabby Klassen, Libby Fryer, Lexie Briscoe, Callum Frost, Noah Frost, Hanna Mares, Nico Mc Donald, Reese Fahlke, Larson Wallenius, Avery Milliken, Amelia Douglas, Charlotte Romo, Zoe Sipka, Rachel Kennedy, Mikayla Staunton, Arianna Ezebuiro, Gemma Mc Kenzie, Emerson Wakefield, Katelyn Johnson.Like most business owners, you probably incur costs on wining and dining customers or clients.Here are five rules you need to know to optimize your deductions. Provided the meal is for business and you’re not just socializing, you can only deduct 50 percent of the cost.To be treated as a deductible cost at 50 percent, the meal must be directly related to the conduct of your business or the meal must directly precede or follow a substantial business discussion.Please remember that dozens and dozens of human hours have gone into this, going through well over 1000 project submissions.We pay strict attention to detail, but we are human, so if you catch an error, please notify us asap at [email protected] so this can be corrected.You’d think that this is an easy tax deduction, but you’d be wrong.
Special rules: There are several exceptions to the 50 percent rule, such as reimbursements to employees that are treated as taxable compensation to them or reimbursements to independent contractors for their meals; these are fully deductible. If you eat out rather than brown bag it for lunch, the cost is on you. This unfavorable result doesn’t change even if you’re across town and are forced to eat out because of business.The IRS looks closely at deductions for meal costs because of the potential for abuse and, if your return is questioned, will ask to see required records: There are a number of apps for your smartphone that assist you with recordkeeping. and take a photo or scan the receipt, making recordkeeping easier. Standard meal allowance rates can ease recordkeeping.Also, those subject to Department of Transportation limitations on hours of service, such as independent interstate truckers, can deduct 80 percent rather than 50 percent of meal costs away from home. As long as you aren’t “away from home” (in tax parlance this means out of town), your meal costs when eating alone are not deductible in any amount. If the meal is deductible, you need certain records to back up your claims.If you are out of town, your meal costs -- eating alone or with others on business -- are subject to the percentage limitation discussed earlier. Technically, no deduction can be claimed without these records, although there are some limited exceptions.
For example, you’re trying to convince a prospect to do business with you in a meeting in your office.
Following your presentation, you take the prospect to lunch.