From guard dogs to Las
Vegas-style showgirl costumes, there's
no limit to what people will try to
write off at tax time for the sake of
their business. But where do you draw
the line? Which write-offs you're trying
to write off go too far?
We assembled a team of
three leading tax attorneys to get their
advice on how far is too far in the land
of tax write-offs. Our team of experts
include Cliff Ennico, a
Connecticut-based business attorney who
specializes in advising small businesses
and entrepreneurs; Donna LeValley, a tax
attorney and contributing editor to the
J.K. Lasser annual tax guide; and
Alvin S. Brown,
a tax attorney who formerly worked with
the office of the chief counsel of the
IRS for more than 25 years.
Tax Write-Off: Travel
Expenses
Here's a write-off
that's sometimes difficult to decide
just where to draw the line. Can you
deduct the cost of going to see a Cirque
du Soleil show in Las Vegas if you're
treating your client? The answer is yes,
as long as you can justify it as a
business expense. And what if your
spouse goes along on the trip? As long
as they're a partner or employee of your
business and attended conventions or
meetings on the trip you took together,
then his or her travel and 50 % of his
or her meals are also deductible.
Expert Opinion:
"You can deduct travel expenses, and
50% of related meals and
entertainment, if the travel is
reasonably related to your
business," explains Cliff Ennico.
How to Do It
Right: Here's a tip from Donna
LeValley that will come in handy on
your next business trip: Grab an
envelope from the stationary drawer
of your hotel room and put all your
receipts from that trip in it. Label
the envelope with a name and date to
help you remember that trip. The
more accurate your records are, the
more likely they'll be accepted and
validated by the IRS if you become
involved in an audit situation.
Tax Write-Off: Cell
Phone Bill
If you use a cell phone
as part of your business, this could be
a big deduction for you. So don't make
the mistake of mixing business with
pleasure by sneaking too many personal
calls onto your cell phone bill.
Expert Opinion:
"Because of the way a cell phone can
be used, it's come under scrutiny,
so people need to keep good records
and keep their actual telephone bill
so they can demonstrate that a
majority of the calls were business
calls," explains LeValley.
How to Do It
Right: Take a look at your
cell-phone bill to make sure you
receive an itemized report. Because
cell phones are considered listed
property, you need to keep detailed
records of their use. In the case of
a land-line, it's a good idea to
have a separate phone number for
your business since the IRS won't
let you allocate the cost of a
single phone in your home to your
home office.
Tax Write-Off: Home
Office
Home-office deductions
used to be a big red flag for an audit
back in the 1990s. These days, you just
need to use the deduction with caution.
A basic rule of thumb to follow?
"Anything that's unusual and
disproportionate to your level of income
is something the IRS will check out,"
Alvin Brown
says.
Presented by Alvin Brown and Associates, tax
attorney, formerly with the Office of the Chief Counsel of the IRS.
Call us for all IRS tax issues, problems and emergencies.
Protect yourself from IRS intimidation, errors, and penalties.
www.irstaxattorney.com
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