Tax Tips: Meals and Miles

By Rick Kutch and Mark Leeder

Tax season can be confusing, especially when determining what counts as a business expense. Here are some key points to help business owners stay on track.

Meals: What Qualifies as a Deduction?

Many people assume any meal eaten during work hours can be written off. However, the IRS has specific rules.

• Business Purpose Required: Meals must involve a client, colleague, or have a clear business purpose.
• No Lunch at Your Desk: Eating alone at your desk doesn't count.
• Keep Detailed Records: Note the date, location, attendees, and business purpose. Without these details, the IRS may reject your deduction.

Vehicle Expenses: What Miles Count?

Many business owners believe any trip made for work qualifies. But only miles driven for specific business tasks are deductible.

• Commuting Doesn’t Count: Trips to and from work are not deductible.
• Business Trips Do: Trips to meet clients or run business errands qualify.
• Maintain a Mileage Log: Record where you went, when, and why. This log is crucial if the IRS questions your expenses.

The Importance of Good Recordkeeping

Good recordkeeping isn't just about avoiding trouble. It also shows that you're serious about your business.

• Avoid Penalties and Disputes: Detailed records reduce the likelihood of penalties or disputes.
• Easier Tax Season: Staying organized all year makes tax season much smoother.

Expert Advice from Rick and Mark

• Stay Organized Year-Round: Don’t wait until tax season to gather receipts and logs.
• Save Meal Receipts: Note the business context for each meal.
• Update Mileage Log Regularly: Ensure you have all necessary information when filing taxes.

Final Reminder

The IRS looks at evidence, not just the type of expense. Even legitimate expenses can be rejected if you can't prove them.

• Start Good Habits Early: It’ll save you time, stress, and potentially money in the long run.