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Flashcards in Taxes: Employee Business Expenses Deck (4)
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1

Taxes:
Employee Business Expenses
Accountable Plans

Accountable Plans
- reimbursement not taxable and no deduction because they net to zero
- reimbursed not under an accountable plan, include in income, and 2% itemized deduction
Requirements
- employee must substantiate all expenses to be reimbursed, and
- excess must be returned to employer

2

Taxes:
Employee Business Expenses
Travel Expenses

Travel Expenses
- trips with a business purpose
- cost of transportation is deductible
- not commuting between residence and work
- amount and purpose substantiated
- direct costs or mileage rate
- if mixed, only if 50%+ related to business
- meals and lodging deductible
- away from home overnight
- meals reduced by 50%
- sometimes if
- overnight
- not more than 5 days once a quarter
- participation in required event
- not lavish

3

Taxes:
Employee Business Expenses
Entertainment

Entertainment
Requirements
- person with business relationship
- substantial discussion
- occur on same business day
- no deduction for facilities or club dues
- dues for public service clubs, professional orgs, and trade associations are deductible
- tickets limited to face value of ticket
- business gifts are limited to $25 per donee per year
Other
- contemporaneous written records are required
- cost of meals and entertainment reduced by 50%

4

Taxes:
Employee Business Expenses
Educational Expenses

Educational Expenses
- not deductible if:
- meet minimum standards of current job or
- qualify for new trade or business
- deductible if:
- maintain or improve existing skills
- meet requirements of employer or imposed by law

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