Tax Deductible Expenses

I’m often asked if a particular expense is tax deductible.  Everyone is looking for a deduction!  In general, only expenses incurred in a trade or business (IRC §162) or those incurred in the production of income (IRC §212), will be deductible on an individual tax return. I once had someone ask me if a new Read more about Tax Deductible Expenses[…]

Business Entertainment Expenses

Closely related to meal expenses are business entertainment expenses.  Both are subject to a 50% reduction in the deductible amount. And, both are subject to the same substantiation requirements; that is, the taxpayer is required to have a receipt documenting the entertainment expense, the individuals entertained, the date and amount spent, and the business purpose Read more about Business Entertainment Expenses[…]

Independent Contrator or Employee?

It is critical that business owners correctly classify the individuals who provide services to their company as employees or independent contractors.  The business must withhold income taxes, pay and withhold Social Security and Medicare taxes, and pay unemployment taxes on wages paid to employees.  Payments made to independent contractors do not require tax withholding.  The Read more about Independent Contrator or Employee?[…]

Per Diem Rates for Travel Expenses

If you incur travel expenses, you may either keep your receipts for meals and lodging and other expenses, or you may use the per diem rate.  Per diem rates are updated on an annual basis and are available online at   The per diem method for lodging and meals & incidentals is permissible for employees Read more about Per Diem Rates for Travel Expenses[…]

Business Travel Expenses

In general, to qualify as a travel expense deduction, the purpose of the trip must be connected with a trade or business or be employment related AND the taxpayer must be away from his tax home overnight, or for a sufficient duration as to require sleep or rest, before returning home.  Determining the purpose of Read more about Business Travel Expenses[…]

More on Telephone Expenses

It was brought to my attention a few days ago, by an IRS agent, that there is a 2009 Tax Court case that applies to the cell phone deductibility question.  The Tax Court disallowed cell phone expenses in John M. Rodriguez v. Commissioner, T.C. Memo 2009-22. The taxpayer, Rodriguez, had both a home phone and Read more about More on Telephone Expenses[…]