write offs-travel agent

[cassieerne]

I'm self employed Schedule C.  Can I write off when I take clients out to dinner or out to golf to talk business and things like that?  I know all of my travel expenses are able to be written off b/c I'm a travel agent so I already write all of my travel expenses off just wondering about the other entertainment and meals, etc.

[rschule1]

Hi There

Re: Meals:

Most work-related meals expenses are generally 50% deductible. 

Some examples of deductible work-related meals include:

• Meals during business travel
• Meals while conducting business
• Meals at a seminar or conference
• Office snacks
• Other meals expenses

Re Golf: The cost of playing golf is not deductible. However costs of meals, drinks, club rentals  may be 50% deductible as business related entertainment.

[K M W]

Hi, cassieerne!  There are a lot of business expenses you can deduct, but some are limited, and some are not deductible under current tax law.

First, in general, IRS Publication 535, Business Expenses, is a great place to start when you are looking at what you can and cannot deduct against your business income.  To be deductible, a business expense must be
both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Publication 535 then goes through several categories of expenses that you can deduct - you can find this publication at this link:  IRS Publication 535 

Your question specifically focused on meals and entertainment - and for that, we look to IRS Publication 463, Travel, Gift and Care Expenses, as found at this link:  IRS Publication 463 

Under current tax law, you can no longer take a deduction for any expense related to activities generally considered entertainment, amusement, or recreation. You can continue to deduct 50% of the cost of business meals if you (or your employee) are present and the food or beverages aren't considered lavish or extravagant.

So taking your client out to a golf outing? Not deductible under current tax law.  However, if you also take the clients out for a meal the day of the golf outing, then those meal expenses may be 50% deductible.  

Food and beverages that are provided during entertainment events are not considered entertainment if purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. However, the entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.  Note that meal expenses incurred after December 31, 2020 but before January 1, 2023 if provided by a restaurant were 100% deductible, but for the 2024 tax year they go back to being only 50% deductible.

Keep in mind that you need to keep adequate documentation for any meal expense you are deducting.  A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information.

•The name and location of the restaurant.
• The number of people served.
• The date and amount of the expense.

[cassieerne]

Would apps like everlance work as far as writing things off go?  They pull right from my credit card and calculate all the meals, etc.  

[K M W]

Apps are a great way to keep track of your expenses for sure! Just make sure the app you are using keeps track of all the information needed to document the expense. I personally love the expense tracking apps where you can snap a picture of the receipt and it will store that as well.

The IRS states: You should keep the proof you need in an account book, diary, log, statement of expense,
trip sheets, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense.

Documentary evidence. You must generally have documentary evidence, such as receipts,
canceled checks, or bills, to support your expenses.

Exception. Documentary evidence isn’t needed if any of the following conditions apply.
• You have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging. 
• Your expense, other than lodging, is less than $75.
• You have a transportation expense for which a receipt isn’t readily available.

Adequate evidence. Documentary evidence will ordinarily be considered adequate if it shows the amount, date, place, and essential character of the expense.
For example, a hotel receipt is enough to support expenses for business travel if it has all of the following information.
• The name and location of the hotel.
• The dates you stayed there.
• Separate amounts for charges such as lodging, meals, and telephone calls.
A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information.
• The name and location of the restaurant.
• The number of people served.
• The date and amount of the expense.
If a charge is made for items other than food and beverages, the receipt must show that this is the case.