Hosting a holiday party for your office gives you a chance to show how much you appreciate your staff. Parties are a great time for coworkers to get together and share in the spirit of the season. But they can also be quite an expense. For many years, companies have been able to deduct the cost of holiday parties on their business taxes. But how has this changed under the new tax laws? A business tax preparation service can help you navigate the new regulations so you don’t face any unwelcome surprises in the new year. Here’s some information from Martinson & Carter CPAs that may be helpful.
Know what can and cannot be deducted
First, you’ll want to know what you’re dealing with – especially given the new laws. As it turns out, your office party can be completely deductible according to the 2018 tax reform. Business meals you plan on having with clients over the holidays can be partly deductible (50%). By the way, transportation to and from these meals with clients is100% deductible.
Planning to give your employees or clients gifts? Be aware that the following items no longer qualify for deductions: entertainment-related meals, sporting event tickets, and club memberships.
Watch out for excessive expenses
Even though an office party can be fully deductible, it’s best to avoid expenses that are over the top. The IRS may get suspicious of any major or out-of-the-ordinary business expenses. Excessive parties are one thing that could raise a red flag. Try to be reasonable with your party plans and stick to a budget this holiday season.
Keep up with all the receipts
Make sure to keep and safely store any receipts that are connected to your business’s holiday get-together. If you have employees taking care of the shopping for you, ask for receipts. You’ll need this documentation in the event that the IRS asks any questions.
Want to learn more about business tax deductions? Contact your local business tax preparation service at Martinson & Carter CPAs today.
