Take Full Advantage of Meal and Entertainment Tax Deductions for Travel

Tax Professionals' Resource
February 17, 2014 — 1,843 views  

Whenever you are traveling for business purpose or for entertaining clients, you are eligible for federal income tax deductions for some portion of the expenses which is not reimbursed by your employer. However, you can deduct half the cost of meals when you are traveling for business purposes. You can determine the cost of these meals by getting to know the actual costs of these meals or by using the standard IRS meal allowance. The IRS reminds taxpayers about the particular guidelines that they need to follow when deducting the entertainment, travel and meal expenses.

However, the biggest difficulty with these tax deductions is the complexity involved in claiming these deductions, as it has been noticed that many taxpayers overstate these tax write-offs to which they are actually entitled.

Deduction on Entertainment Expenses

Entertaining customers and clients will normally entitle you for a deduction of up to 50 percent. However, in order to do that, you have to keep a genuine record on all those who were present at that particular time, the reason for which you had to entertain the clients and its date and time.

Travel Deductions

The taxpayers who normally travel outside home on business can take off affiliated expenses, which include the cost of living accommodations and meals, the cost of reaching their destination and any other essential expenditure. The taxpayers are considered to be traveling away from home only if their responsibilities necessitate them to be away from home for a considerably long period of time. The cost of meals and basic expenses can be subtracted or the taxpayer can use a regular meal allowance.

Guidelines on Meal Deductions

The expenses involved have to be fair and indispensable business expense. They must be directly related to the activity of the business. However, you cannot deduct the cost of meals if you are traveling for any personal reasons. However, if you are involved in doing some business work in a primarily personal trip, you can deduct only those costs which are directly related to the business.

With these guidelines you will be able to make full use of the tax write-offs. You are not supposed to spend from your own pocket while you are on a business trip. These things must be made very clear from the beginning. However, all the organizations are also very careful as they know that many employees take undue advantages of these tax deductions. So if and when you feel that you are entitled to some deductions or reimbursements, do not forget to carefully collect all the bills and documents that you may have to show to your organization to claim all the money that you are entitled to receive.

Different nations have different rules and regulations regarding these deductions. For example, the IRS in the U.S. is very strict regarding these deductions and those who are caught making false claims are punished.

Tax Professionals' Resource