Tuesday, October 14, 2008

Business Expense Deduction:Meals & Incidental

If you are self-employed and often have expenses, you need to also include your meals and other incidental expenses as well. According to the IRS, you can deduct the cost of meals in either of the following situations:

*It is necessary for you to stop for substantial sleep or rest to properly perform you daiy duties while traveling away from home on business.

*The meal is business-related entertainment.

However, you cannot deduct expenses for meals that are lavish or extravagant. An expense is not considered lavish or extravagant if it is based on actual circumstances. Expenses will not be dissalowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts.

Gernerally you are able to deduct 50% of the cost of your meals according to the IRS regulations. If you consume the meals during incident to any period subject to the Department of Transportation hours of service limits,you can deduct a higher percentage. The percentage is 75% for 2006 and 2007 and 80% for 2008 and thereafter. These certain air transporation workers ae pilots,crew,dispachers,mechanics, and control tower operaters, interstate truck operaters and bus drivers.

Incidental Expenses:

*These include tips to porters, baggage carriers,bellhops,hotel maids,stewards, or stewardesses and others on ships, and hotel servants in foreign countries.
*Transportation between places of lodging or business and places where meals are taken.
*Mailing costs associated with travel vouchers and payment of employer-sponsored charge card billings.

If you have questions, or need a tax profesional, don't hesitate to reach out for assistance.

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