|Tax man cometh with deductions for you|
|Options for the non-reimbursed|
|Backing it up|
Naturally, there are restrictions.
The Internal Revenue Service recently updated the rules for deducting the expenses incurred while at events such as the two major woodworking machinery shows, IWF and AWFS. In addition to new, higher “per-diem” figures, the revised guidelines outline an optional method under which both self-employed woodworking professionals and employees who are not reimbursed, can utilize the per-diem allowances.
Fortunately, thanks to our tax laws, the government will pick up the tab for a sizable portion of your expenses while attending a trade show or convention — if you follow the rules. Usually all that is required for convention-related tax deductions is that you be able to show, if asked, that attendance benefited your woodworking business.
The expenses incurred while traveling to the site of that convention, trade show or event are, as mentioned, tax deductible. Tax-deductible travel expenses include such expenditures as the cost of traveling by plane, train, bus or car between your home and the site of the meeting, convention or trade show. Also included are the expenses of taxis, commuter bus and airport limousines, baggage and shipping costs for samples or display materials, lodging and meals, cleaning, telephone and even tips. And, of course, the costs associated with attending the convention itself.
Part of the fun associated with attending a trade show or convention is often the meals. Well, maybe not the meals themselves. But the fact that those meals offer a woodworking professional the opportunity to entertain prospective customers or even potential suppliers certainly seems to make them more enjoyable. Even when those convention-related meals do not involve entertainment, the tax deduction for meal expenses frequently makes them taste better.
Unfortunately, when it comes to meals, the tax rules contain quite a few restrictions as well as a number of loopholes. Generally, expenses for meals include all amounts spent for food, beverages, taxes and related tips. However, the tax deduction for meals is labeled by the IRS as “entertainment” and is generally limited to only 50 percent of the amount actually spent.
Under the tax rules, those woodworking professionals attending a trade show or convention that are away from home overnight, are permitted to use either the actual cost of the meals or a standard amount to compute the tax deduction for convention-related meals. If you, as an individual, are reimbursed for those expenses, how you apply the 50 percent limit depends on whether your employer’s reimbursement plan was accountable or non-accountable.
Should any attendee’s spouse, family members or others accompany them to a trade show or convention, either the attendee or his or her woodworking business can deduct their travel expenses. But only if that individual is an employee of the business; has a bona fide business purpose for the trip; and would otherwise be allowed to deduct those convention expenses