Summer is here and in full-swing! But that doesn’t mean business or tax planning takes a break. Depending on your plans this June, July, and August, you may find several opportunities to combine business activities with pleasure, which could result in favorable tax breaks.
Alloy Silverstein’s CPAs and business advisors break down five of those potential breaks and tax strategies.
Normally, deductions for business entertainment and meals are limited to 50 percent of the expenses. However, you can write off 100 percent of the cost of a company picnic, outing, or other get-together — plus an invaluable boost in morale! Note that to be eligible, you cannot restrict the outing to only a select few employees.
If you are traveling on business this summer, you might extend the trip a few days to get in some sightseeing. Generally, you can deduct your travel expenses — including airfare and 50 percent of your meals — if the primary purpose of the travel is business related. But you can’t deduct expenses for your side trips.
Thinking of bringing your wife or husband along? “The total hotel cost would be deductible if your spouse accompanied you,” says Mike Engleman, CPA.
When you send your children who are under age 13 to day camp so you and your spouse can work in the summer, you may claim the dependent care credit for the expense. What will you need in order to accurately claim the credit? “Make sure you get the name, address, and tax identification number of the camp provider,” recommends Julie Strohlein, CPA. “It can be difficult to obtain after the summer camp has closed for the season.”
Usually, the maximum credit is $600 for one child and $1,200 for two or more children. The cost of overnight camp doesn’t qualify.
If you are on a tight budget and are looking for ways to fund such a camp excursion, Ren Cicalese III, CPA, MST reminds parents that, “if your company offers a dependent care FSA as a benefit, you can use those funds to pay for your children’s summer camp.” Associate Partner Rich Middleton, CPA points out that, if that is the case, the company does offers the dependent care FSA as part of their section 125 Cafeteria Plan, “funding a dependent care flexible spending account may generate more tax savings than the dependent care tax credit.” Check in with your accountant to discuss the more beneficial course of action for your individual situation.
If you rent out your vacation home when you’re not using it, you often can deduct your rental expenses in full. Deductions are limited to rental income if your personal use for the year exceeds the greater of 14 days or 10 percent of the rental time. Note: There are no tax consequences for a rental of two weeks or less.
Although you can’t claim deductions for an entertainment facility, like a boat, you may still write off 50 percent of entertainment expenses relating to the facility. For instance, if you take a client deep sea fishing after a substantial business meeting, you can deduct the fuel, food, and drinks — even the fish bait.
However, accountant Chris Cicalese CPA, MSTFP advises, “If your entertainment expenses are considered lavish or extravagant considering the circumstances, they may not be deductible at all.”
These are just a handful of tax saving possibilities, but it’s important to be aware of exclusions and limitations that may apply to your situation. This is another example of how year-round tax planning with your CPA or accountant can pay off at tax time.
Contact us for guidance and application to your individual situation →
© MC 2017 | “Tax Tips” are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
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