Question

Examine three examples of travel and entertainment expenses that are deductible for a business. What are some unreimbursed expenses that can be deducted personally? Are there limitations to these types of deductions?

Answer 1

Examples of travel and entertainment expense that are deductible for business:

Travel expense:

1. Car rental/ Uber/ Lyft.
2. Baggage and shipping fees.
3. Hotel / Lodging.
4. Wi-Fi/Telephone

Entertainment expense:

1. Tickets to a sporting event, including food and beverage.
2. Business conference fees, including food and beverage.
3. Tickets to charitable fundraising events.
4. Business party for clients and employees.

Travel expense:

Expenses that incur while travelling for business are deductible if they are ordinary and necessary. While a necessary expense is one that’s helpful and appropriate for your business. So we can deduct 100% of our travel expenses that are ordinary and necessary. An ordinary expense is one that’s common and accepted in your trade or business.

                                                We can’t deduct travel expenses on a trip that is primarily for personal reasons, like a vacation tour, holiday travel etc. so we can deduct expenses have while at our destination that are directly related to our business.

Entertainment expense:

Expenses that incur to entertain a client, customer, or employee must be ordinary and necessary. We cannot deduct things like dues for membership in any club organized for business, pleasure, recreation, or another social purpose. We are allowed to deduct 50% of all eligible entertainment expenses. The 50% limit applies to entertainment expenses that we have while entertaining customers or employees at our place of business, a restaurant, or another location.

Some unreimbursed expenses that can be deducted personally, there are limitations to these types of deductions.

Employees were able to deduct unreimbursed job expenses as a personal itemized deduction. The rule states that the things you spend money on must be ordinary and necessary business expenses for your employer. Ordinary and necessary expenses which is incurred for business must be deducted. Other and unrelated to business which incurred personally will not be paid back.

Examples:

1. Vehicle expenses.
2. Parking, toll and local transportation expenses.
3. Travel expenses.
4. Other business expenses.