IRS Says TCJA Allows Client and Prospect Business Meal Deductions

In Notice 2018-76, the IRS states that client and prospect business meals continue as tax deductions under the Tax Cuts and Jobs Act. This is very good news indeed.

Under this new IRS guidance, you may deduct 50 percent of your client and prospect business meals if

  • the expense is an ordinary and necessary expense under Internal Revenue Code (IRC) Section 162(a) and is paid or incurred during the taxable year in carrying on any trade or business;

 

  • the expense is not lavish or extravagant under the circumstances;

 

  • the taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages;

 

  • the food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and

 

  • in the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. The entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.

 

To prove your business meals, follow the two easy steps below:

 

  • Keep the receipt that shows the name of the restaurant, the number of people at the table, and an itemized list of food and drinks consumed.

 

  • On the receipt, record the name or names of the person or persons with whom you had the meal and also record the business reason for the meal.

 

In the event the receipt is not available, such as with the purchase of hot dogs and drinks at a baseball game while sitting in the stands, make sure to make a written note of the expenditures immediately after the game.

If you charge a business meal to a credit card, the credit card statement provides your proof of payment. When possible, always pay by credit card or write a check so that you have clear proof of payment.

Proof of payment is not proof of what you purchased, so in addition to proof of payment, keep the receipt with the notations as described earlier. With this combination of proof of payment and receipt with notations, you have what we call audit-proof documentation.

Home Office Deduction

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Do you need more 2020 tax deductions?

Do you need more 2020 tax deductions?

2021 Last Min – Year End Retirement Deductions

2021 Last-Minute Year-End Retirement Deductions
The clock continues to tick. Your retirement is one year closer.
You have time before December 31 to take steps that will help you fund the retirement you desire.
Take a few minutes to review the four retirement plan tax-reduction strategies in this article.
You might find several thousand dollars (and maybe much more) in your pocket by taking the actions in this article. But you’ll need to act now to get the cash.

Last Minute 2020 Biz Deductions

The purpose of this post is to get the IRS to owe you money.

Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.
Here are seven powerful business tax deduction strategies that you can easily understand and implement before the end of 2020.

Year End Medical Plan Strategies

Here are the six opportunities for you to consider for your business’s Year End Medical Plan Strategies.

Want to know more?  Have some tax questions of your own?  Get in touch with us and we’ll guide you thru the tax and accounting process.

7 + 11 =

Home Office Deduction

Home Office DeductionWith a growing number of business owners now working from home, many may qualify for the home office deduction, also known as the deduction for business use of a home. Usually, a business owner must use a room or other identifiable portion of the...

Is a Property Fix-up and Sale an Investor or a Dealer Property?

Is a Property Fix-up and Sale an Investor or a Dealer Property? Background I’m an independent computer consultant who nets $100,000 from my proprietorship. I bought a house in March 2019, fixed it up, and sold it in April 2020 at a net profit of $85,000. I bought...

Health Savings Accounts: The Ultimate Retirement Account

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Tax Implications of Investing in Precious Metal Assets

These days, some IRA owners and investors may be worried about being overexposed to equities. That could be you.
But the safest fixed income investments (CDs, Treasuries, and money-market funds) are still paying microscopic interest rates.
For example, when this was written, the 10-year Treasury was yielding about 1.92 percent. Ugh!
Meanwhile, the pandemic might or might not be coming to an end, the economy might or might not be okay, and inflation might or might not be controlled. Who knows?
In this uncertain environment, investing some of your IRA money in gold or other precious metals such as silver and platinum may be worth considering. Ditto for holding some precious metal assets in taxable form. This article explains the federal income tax implications. Here goes.

The Mom and Dad Hotel

Mom and Dad can rent out a room in their home or rent their entire house (tax-free) if they rent it out for no more than 14 days during the year. While the rules are generous in allowing your parents not to include this rental income as taxable income, they can’t offset that income with expenses associated with the rental.

QSEHRA and HRA

Have you established a 105-HRA, Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), or Individual Coverage Health Reimbursement Arrangement (ICHRA) to reimburse your employees for medical expenses?