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Tags: finance, income tax, meal and entertainment expenses
 As much as possible, taxpayers are making ways in order to reduce their tax liability. Even though payment is just once in every year, its still expenses on the part of the taxpayers. That’s why government is providing means to make the obligation not too much of a burden to you and other taxpayers.
Deductions and exemptions are available for everyone. However, deductible expenses should be within the tax laws. There are lots of expenses which can be deducted in your gross taxable income. In order to arrive at the net taxable income, you have to declare the possible deductions. The net taxable income is the basis in computing for your tax due.
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If you have meal and entertainment expenses, you better keep all the receipts. The said expenses are deductions in your tax return. Good news to those who frequent restaurants and other food chains. If you are also fond of entertainment services, you will not only be entertained but also beneficial on your tax returns.
But, not all can be deducted. There are rules pertaining to what is deductible or not. If ever the said expenses are part of deductions, you will categorize it again to partially or fully deductible. It’s not really the full amount but at least you will be allowed for certain deductions.
You should not be confused about deductible and non-deductible items. It’s high time you learn deductible meal and entertainment expenses. If you are preparing your own tax return, it will help you greatly. You must determine and eliminate all those non-deductible expenses. Expenditures considered non-deductible are those cost arising from memberships in clubs and other organizations.
If you are a member of a club intended for recreation, social, business and pleasure, it will depend on the purpose and activities of the so-called clubs. You cannot deduct payments made to clubs like airline, golf, hotels, and others which serve food. Meal and entertainment expenses to be deductible must conform to the rules governing taxes.
There are expenditures which can be deducted partially only. Partially means 50% of the cost. Certain requirements must be followed in able to deduct half of the costs. First, the costs are essential in the conduct of your profession or business. If you are engage in business, all costs must be in relation to the business and not for personal purposes.
It can be considered as business expense if it’s main goal is for the growth of the business- like for example, dining out with a prospective clients or customers. If for an instance, the entertainment is just secondary to the conduct of business, it is not deductible at all. The said meal and entertainment expenses are not only limited on the place of business but anywhere as long as it’s for business.
Even if you’re traveling anywhere in the world, just as long as it meets the criteria, a 50% deduction will still apply. On the other hand, there are also 100% deductible items. If on your promotions and advertising strategy, a meal and entertainment is provided to the public- then it is a full deduction.
Another meal and entertainment expenses which are fully deductible are for company holiday expenses. In order to avail the deductions, you must document it in the form of receipts. Paying taxes is not burdensome with the help of deductions. It lessen the taxable amount thus lowers the tax due.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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