How to Claim Business Meetings as Tax Deductible

The Expenses Associated with Business Meetings

Businesswoman leading meeting in startup office
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If you or your employees attend conferences or meetings associated with your business, the costs that come with this travel are at least partially deductible. If you fly to your destination, you can usually deduct the cost of your plane ticket. And you can deduct the cost of driving to the meeting using the IRS standard mileage rate. However, the IRS generally prefers you travel the cheapest way.

Allowable Deductions

Travel, meals, and entertainment expenses are allowable deductions, with exceptions and restrictions, under Internal Revenue Service (IRS) rules for business.

The IRS defines travel expenses as ordinary and necessary expenses of traveling away from home for your business, job, or profession. Generally, your “home” for tax purposes is the entire city or general area where you live. If you have other miscellaneous expenses, such as tips, you can generally deduct them in full as long as they are reasonable and you keep your receipt. Other deductible tax expenses include:

  • Transportation expenses can be deducted from the cost of transportation between your home and your business destination. If you drive your car, the best method is generally to use the standard mileage rates established by the IRS. You can also deduct the following: taxi fare, commuter bus or airport limo, baggage and shipping, dry cleaning and laundry, tips, and various other expenses.
  • Lodging costs can be deducted as part of a travel expense. The exact per diem rates for every state are available online. To be sure you are calculating rates correctly, you should take a look at the state per diem rates.
  • Meals: You can also deduct the cost of your meals while you are traveling, but only 50% of the unreimbursed cost of your meals is allowed by the IRS. You can also use the allowed state per diem rate.
  • Entertainment expenses are generally a red flag for the IRS. In order to be able to deduct entertainment expenses, the activity has to be necessary for your business to earn income and it has to take place in a clear business setting, such as a conference room at a convention. It cannot take place in a nightclub, theatre, social gathering, sports event or cocktail party.

    Proving a Business Expense

    When you deduct an entertainment expense, you have to be able to prove that a substantial business discussion has taken place during the activity. Generally, you can only deduct 50% of entertainment expenses.

    It is very important to practice good recordkeeping for travel, meal, and entertainment expenses. Keep your receipts and keep mileage records in a journal you keep in your vehicle or on your smartphone. This category of deductions is often a red flag to the IRS and you may be asked to prove your deductions if you are audited.

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