How to Deduct Entertainment and Meals on Your Taxes

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Deducting entertainment and meals is often a gray area that people take advantage of. My general rule of thumb is that as long as you don’t abuse the tax code, you should be fine. I use what I call the “bullshit” code. If I can tell my wife with a straight face that a particular expense was used for business purposes, and my wife doesn’t think its BS, its usually good enough for me.

Officially though, anything you expense must obey the following rules.

The entertainment expense must be reasonable and accepted in your field of business – For example, if I’m selling vegetarian food over the internet, it most likely wouldn’t fly if I took the employees out for a steak dinner. In any case, you get the point.
The purpose of the entertainment expense must be to bring in revenue – For example, if you are hosting an event to promote your company, this is perfectly acceptable. Even if you and your business partner go out to eat to discuss the business, your meal can be deducted as well.
The expense can’t be extravagant – Basically, this means don’t abuse this deduction!

Anyways, entertainment is defined as any activity or recreation that directly for customers, clients or employees. Only 50% of entertainment and meals is deductible but these expenses can add up over the course of the year. For our store, my wife and I go out at least once every few weeks to discuss new ways to expand the business.

Learn other ways on how to save on your tax return

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One Response to “How to Deduct Entertainment and Meals on Your Taxes”

# Why You Should Worry About Your Topline More Than Your Bottom Line | MyWifeQuitHerJob.comon 22 Sep 2008 at 5:33 pm

[...] So we tried being frugal, cutting back on going out to eat and pretty much eliminating all of our entertainment expenses. After trying to do this for about 4 weeks, I finally got fed up and decided to calculate whether [...]