Appropriate business deductions are always allowed. Always. The problem is that not all deductions are appropriate. Sometimes taxpayers get carried away, and their vacation is morphed at tax time into a business trip. Others report their vehicle as being used exclusively for the business, and forget about all the personal driving they do in their cars. These types of deductions stand out to the IRS, making easy pickings for IRS auditors. As with other deductions, one of your best defenses is to keep receipts. With them keep notes or a log identifying the purpose for the deduction and how it relates to your business. Specifically, for meals & entertainment (M&E), you should document each expense with the amount and place (both of which are usually on the receipt), as well as the people in attendance and business purpose of the meeting or discussion.
Don't be afraid to deduct your business expenses. Just make sure they *are business expenses. Comments are closed.
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