From guard dogs to Las Vegas-style showgirl costumes, there is no limit from what people will try to create off at tax time with regard to their business. But where do you draw the comparative series? Which write-offs you’re trying to create off go too much? We assembled a team of three leading tax lawyers to get their advice about how far is too much in the land of tax write-offs.
Our team of experts include Cliff Ennico, a Connecticut-based business attorney who specializes in advising small businesses and entrepreneurs; Donna LeValley, a tax lawyer and contributing editor to the J.K. Lasser annual taxes guide;, and Alvin S. Brown, a tax lawyer who formerly worked with any office of the principal counsel of the IRS for more than 25 years. Here is a write-off that’s sometimes difficult deciding just where to draw the line.
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Can you deduct the expense of going to see a Cirque du Soleil show in Las Vegas if you’re treating your client? The answer is yes, as long as you can justify it as a business expenditure. And what if your partner goes along on the trip? As long as they’re a partner or worker of your business and went to conventions or conferences on the trip you took together, then his or her travel and 50 percent of his or her foods are also deductible.
Expert Opinion: “You can deduct travel expenses, and 50 percent of related entertainment and foods, if the travel is fairly related to your business,” clarifies Cliff Ennico. If you use a cell phone as part of your business, this may be a huge deduction for you. So don’t make the mistake of combining business with pleasure by sneaking way too many personal calls onto your cell phone bill.
How to Do It Right: Take a look at your cell phone bill to be sure you receive an itemized record. Because cell phones are considered shown a property, you need to keep comprehensive records of their use. In the full case of the land series, it’s a good idea to have a separate contact number for your business because the IRS won’t enable you to allocate the expense of a single phone in your home to your home office. Home office deductions used to be a huge red flag for an audit back in the 1990s. These full days, you merely need to use the deduction with extreme care. A basic rule of thumb to check out?
So how will you determine your real home office space? This is the area in your home dedicated solely to the running of your business. Expert Opinion: “Don’t measure your home office space yourself. When you do, you always shortchange yourself almost,” says Ennico. How to Do It Right: It’s a good idea to truly have a service provider measure your space appropriately.
They can offer you with a letter stating the precise square footage of your home office space in the event you need to substantiate it with the IRS. As our experts before described, it’s not smart to mix your business world with your own personal life. So they recommend never using your office at home computer for personal tasks when you can help it.