What types of expenses can’t be written off by your business?
- ByPolk & Associates
- Oct, 04, 2023
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If you spend money in the course of doing business, you want to be able to deduct it on your tax return. But in order to write off expenses, they must meet certain requirements. Under tax law, you can deduct “ordinary and necessary” business expenses. In general, an expense is considered ordinary if it’s common or customary in your trade or business. A necessary expense is defined as being helpful or appropriate. In order to be deductible, an expense must also be reasonable in relation to the benefit expected. Proceed with caution if expenses are unusual or could be considered fun, personal or extravagant. And keep careful records to prove your expenses. Consult with us for guidance.
Business owners: Think carefully about fringe benefits related to smartphones
- ByPolk & Associates
- Oct, 04, 2023
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You’d be hard-pressed to find many employees these days who don’t use a smartphone for work. In turn, business owners may consider providing a fringe benefit related to those phones or their usage. For example, you might give your employees a phone. If you do, business use of it may be treated as a nontaxable fringe benefit so long as the phone is provided “primarily for noncompensatory business purposes.” It can’t be a substitute for compensation or a way to draw job applicants or boost morale. The IRS has indicated that it will analyze reimbursement of employees’ expenses for business use of their own phones similarly, though specific conditions must be met. Contact us for more info.