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Turbo Tax Self Employed

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Turbo Tax Self Employed

Turbo tax self employed Publication 535 - Introductory Material Table of Contents IntroductionOrdering forms and publications. Turbo tax self employed Tax questions. Turbo tax self employed Future Developments What's New for 2013 What's New for 2014 Reminders Introduction This publication discusses common business expenses and explains what is and is not deductible. Turbo tax self employed The general rules for deducting business expenses are discussed in the opening chapter. Turbo tax self employed The chapters that follow cover specific expenses and list other publications and forms you may need. Turbo tax self employed Comments and suggestions. Turbo tax self employed   We welcome your comments about this publication and your suggestions for future editions. Turbo tax self employed   You can send your comments to: Internal Revenue Service Tax Forms and Publications SE:W:CAR:MP:TFP 1111 Constitution Ave. Turbo tax self employed NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Turbo tax self employed Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Turbo tax self employed   You can send us comments from www. Turbo tax self employed irs. Turbo tax self employed gov/formspubs/. Turbo tax self employed Click on “More Information” and then on “Give us feedback. Turbo tax self employed ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax publications. Turbo tax self employed Ordering forms and publications. Turbo tax self employed   Visit www. Turbo tax self employed irs. Turbo tax self employed gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Turbo tax self employed Internal Revenue Service 1201 N. Turbo tax self employed Mitsubishi Motorway Bloomington, IL 61705-6613 We cannot answer tax questions sent to either the “Comments and suggestions” or “Ordering forms and publications” address. Turbo tax self employed Tax questions. Turbo tax self employed   If you have a tax-related question, please go to Help With Tax Questions on IRS. Turbo tax self employed gov. Turbo tax self employed If you've looked around our site and still didn't find the answer to your general tax question, please call our toll-free tax assistance line at 1-800-829-1040 for individual tax questions or 1-800-829-4933 for business tax questions. Turbo tax self employed Future Developments For the latest information about developments related to Publication 535, such as legislation enacted after it was published, go to www. Turbo tax self employed irs. Turbo tax self employed gov/pub535. Turbo tax self employed What's New for 2013 The following items highlight some changes in the tax law for 2013. Turbo tax self employed Optional safe harbor method to determine the business use of a home deduction. Turbo tax self employed  Beginning in 2013, you can use the optional safe harbor method to determine the deduction for the business use of your home. Turbo tax self employed For more information, see chapter 1. Turbo tax self employed Standard mileage rate. Turbo tax self employed  Beginning in 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for each mile of business use is 56. Turbo tax self employed 5 cents per mile. Turbo tax self employed For more information, see chapter 11. Turbo tax self employed Additional Medicare Tax. Turbo tax self employed  Beginning in 2013, a 0. Turbo tax self employed 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 if single, head of household, or qualifying widow(er) with dependent child. Turbo tax self employed Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. Turbo tax self employed RRTA compensation should be separately compared to the threshold. Turbo tax self employed For more information, see chapter 5 or visit www. Turbo tax self employed irs. Turbo tax self employed gov and enter the following words in the search box: Additional Medicare Tax. Turbo tax self employed Retiree drug subsidy. Turbo tax self employed  Beginning in 2013, sponsors of certain qualified retiree prescription drug plans must account for the subsidy received by reducing the amount of qualified retiree prescription drug plans expense by the subsidy received (taking into account the taxpayer's accounting method). Turbo tax self employed For more information, visit www. Turbo tax self employed irs. Turbo tax self employed gov and enter the following words in the search box: Retiree drug subsidy. Turbo tax self employed What's New for 2014 The following item highlights a change in the tax law for 2014. Turbo tax self employed Standard mileage rate. Turbo tax self employed  Beginning in 2014, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for each mile of business use is 56 cents per mile. Turbo tax self employed Film and television productions costs. Turbo tax self employed  The election to expense film and television production costs does not apply to productions that begin in 2014. Turbo tax self employed For more information, see chapter 7. Turbo tax self employed Reminders The following reminders and other items may help you file your tax return. Turbo tax self employed IRS e-file (Electronic Filing) You can file your tax returns electronically using an IRS e-file option. Turbo tax self employed The benefits of IRS e-file include faster refunds, increased accuracy, and acknowledgment of IRS receipt of your return. Turbo tax self employed You can use one of the following IRS e-file options. Turbo tax self employed Use an authorized IRS e-file provider. Turbo tax self employed Use a personal computer. Turbo tax self employed Visit a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) site. Turbo tax self employed For details on these fast filing methods, see your income tax package. Turbo tax self employed Form 1099 MISC. Turbo tax self employed  File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year in the course of your trade or business at least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, and crop insurance proceeds. Turbo tax self employed See the Instructions for Form 1099-MISC for more information and additional reporting requirements. Turbo tax self employed Photographs of missing children. Turbo tax self employed  The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children. Turbo tax self employed Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Turbo tax self employed You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) (24-hours a day, 7 days a week) if you recognize a child. Turbo tax self employed Prev  Up  Next   Home   More Online Publications
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The Turbo Tax Self Employed

Turbo tax self employed 2. Turbo tax self employed   Entertainment Table of Contents Directly-Related Test Associated TestMeetings at conventions. Turbo tax self employed 50% LimitExceptions to the 50% Limit What Entertainment Expenses Are Deductible?A meal as a form of entertainment. Turbo tax self employed Deduction may depend on your type of business. Turbo tax self employed Exception for events that benefit charitable organizations. Turbo tax self employed Food and beverages in skybox seats. Turbo tax self employed What Entertainment Expenses Are Not Deductible?Out-of-pocket expenses. Turbo tax self employed You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Turbo tax self employed The rules and definitions are summarized in Table 2-1 . Turbo tax self employed You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests. Turbo tax self employed Directly-related test. Turbo tax self employed Associated test. Turbo tax self employed Both of these tests are explained later. Turbo tax self employed An ordinary expense is one that is common and accepted in your trade or business. Turbo tax self employed A necessary expense is one that is helpful and appropriate for your business. Turbo tax self employed An expense does not have to be required to be considered necessary. Turbo tax self employed The amount you can deduct for entertainment expenses may be limited. Turbo tax self employed Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Turbo tax self employed This limit is discussed later under 50% Limit. Turbo tax self employed Directly-Related Test To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that: The main purpose of the combined business and entertainment was the active conduct of business, You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit at some future time. Turbo tax self employed Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. Turbo tax self employed Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. Turbo tax self employed See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter. Turbo tax self employed You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. Turbo tax self employed It is not necessary to devote more time to business than to entertainment. Turbo tax self employed However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test. Turbo tax self employed Table 2-1. Turbo tax self employed When Are Entertainment Expenses Deductible? General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. Turbo tax self employed Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. Turbo tax self employed An ordinary expense is one that is common and accepted in your trade or business. Turbo tax self employed A necessary expense is one that is helpful and appropriate. Turbo tax self employed Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. Turbo tax self employed   Associated test Entertainment is associated with your trade or business, and Entertainment is directly before or after a substantial business discussion. Turbo tax self employed Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. Turbo tax self employed You cannot deduct expenses that are lavish or extravagant under the circumstances. Turbo tax self employed You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit ). Turbo tax self employed You do not have to show that business income or other business benefit actually resulted from each entertainment expense. Turbo tax self employed Clear business setting. Turbo tax self employed   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. Turbo tax self employed The following situations are examples of entertainment in a clear business setting. Turbo tax self employed Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products. Turbo tax self employed Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer). Turbo tax self employed Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. Turbo tax self employed An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained. Turbo tax self employed Expenses not considered directly related. Turbo tax self employed   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. Turbo tax self employed The following are examples of situations where there are substantial distractions. Turbo tax self employed A meeting or discussion at a nightclub, theater, or sporting event. Turbo tax self employed A meeting or discussion during what is essentially a social gathering, such as a cocktail party. Turbo tax self employed A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts. Turbo tax self employed Associated Test Even if your expenses do not meet the directly-related test, they may meet the associated test. Turbo tax self employed To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is: Associated with the active conduct of your trade or business, and Directly before or after a substantial business discussion (defined later). Turbo tax self employed Associated with trade or business. Turbo tax self employed   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. Turbo tax self employed The purpose may be to get new business or to encourage the continuation of an existing business relationship. Turbo tax self employed Substantial business discussion. Turbo tax self employed   Whether a business discussion is substantial depends on the facts of each case. Turbo tax self employed A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit. Turbo tax self employed   The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. Turbo tax self employed It is not necessary that you devote more time to business than to entertainment. Turbo tax self employed You do not have to discuss business during the meal or entertainment. Turbo tax self employed Meetings at conventions. Turbo tax self employed   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. Turbo tax self employed However, your reason for attending the convention or meeting must be to further your trade or business. Turbo tax self employed The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting. Turbo tax self employed Directly before or after business discussion. Turbo tax self employed   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion. Turbo tax self employed   If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. Turbo tax self employed Among the facts to consider are the place, date, and duration of the business discussion. Turbo tax self employed If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day. Turbo tax self employed Example. Turbo tax self employed A group of business associates comes from out of town to your place of business to hold a substantial business discussion. Turbo tax self employed If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. Turbo tax self employed The expense meets the associated test. Turbo tax self employed 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Turbo tax self employed (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. Turbo tax self employed See Individuals subject to “hours of service” limits , later. Turbo tax self employed ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. Turbo tax self employed Figure A summarizes the general rules explained in this section. Turbo tax self employed The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. Turbo tax self employed Included expenses. Turbo tax self employed   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. Turbo tax self employed However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Turbo tax self employed Figure A. Turbo tax self employed Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Turbo tax self employed See Exceptions to the 50% Limit . Turbo tax self employed Please click here for the text description of the image. Turbo tax self employed Figure A. Turbo tax self employed Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions Application of 50% limit. Turbo tax self employed   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later. Turbo tax self employed   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Turbo tax self employed It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. Turbo tax self employed It also applies to the cost of meals included in deductible educational expenses. Turbo tax self employed When to apply the 50% limit. Turbo tax self employed   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Turbo tax self employed You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication. Turbo tax self employed Example 1. Turbo tax self employed You spend $200 for a business-related meal. Turbo tax self employed If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Turbo tax self employed Your deduction cannot be more than $45 (50% × $90). Turbo tax self employed Example 2. Turbo tax self employed You purchase two tickets to a concert and give them to a client. Turbo tax self employed You purchased the tickets through a ticket agent. Turbo tax self employed You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Turbo tax self employed Your deduction cannot be more than $80 (50% × $160). Turbo tax self employed Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Turbo tax self employed Figure A can help you determine if the 50% limit applies to you. Turbo tax self employed Expenses not subject to 50% limit. Turbo tax self employed   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Turbo tax self employed 1 - Employee's reimbursed expenses. Turbo tax self employed   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Turbo tax self employed Accountable plans are discussed in chapter 6. Turbo tax self employed 2 - Self-employed. Turbo tax self employed   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met. Turbo tax self employed You have these expenses as an independent contractor. Turbo tax self employed Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform. Turbo tax self employed You provide adequate records of these expenses to your customer or client. Turbo tax self employed (See chapter 5 . Turbo tax self employed )   In this case, your client or customer is subject to the 50% limit on the expenses. Turbo tax self employed Example. Turbo tax self employed You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. Turbo tax self employed You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. Turbo tax self employed If the client can deduct the expenses, the client is subject to the 50% limit. Turbo tax self employed If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit. Turbo tax self employed 3 - Advertising expenses. Turbo tax self employed   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Turbo tax self employed For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit. Turbo tax self employed 4 - Sale of meals or entertainment. Turbo tax self employed   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. Turbo tax self employed For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit. Turbo tax self employed 5 - Charitable sports event. Turbo tax self employed   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. Turbo tax self employed For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later. Turbo tax self employed Individuals subject to “hours of service” limits. Turbo tax self employed   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. Turbo tax self employed The percentage is 80%. Turbo tax self employed   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Turbo tax self employed Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Turbo tax self employed Interstate truck operators and bus drivers who are under Department of Transportation regulations. Turbo tax self employed Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Turbo tax self employed Certain merchant mariners who are under Coast Guard regulations. Turbo tax self employed What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Turbo tax self employed Entertainment. Turbo tax self employed   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Turbo tax self employed Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. Turbo tax self employed   Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families. Turbo tax self employed A meal as a form of entertainment. Turbo tax self employed   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. Turbo tax self employed A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Turbo tax self employed To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Turbo tax self employed    You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Turbo tax self employed    Meals sold in the normal course of your business are not considered entertainment. Turbo tax self employed Deduction may depend on your type of business. Turbo tax self employed   Your kind of business may determine if a particular activity is considered entertainment. Turbo tax self employed For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. Turbo tax self employed This is because fashion shows are typical in your business. Turbo tax self employed But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment. Turbo tax self employed Separating costs. Turbo tax self employed   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. Turbo tax self employed You must have a reasonable basis for making this allocation. Turbo tax self employed For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Turbo tax self employed Taking turns paying for meals or entertainment. Turbo tax self employed   If a group of business acquaintances takes turns picking up each others' meal or entertainment checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Turbo tax self employed Lavish or extravagant expenses. Turbo tax self employed   You cannot deduct expenses for entertainment that are lavish or extravagant. Turbo tax self employed An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Turbo tax self employed Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Turbo tax self employed Allocating between business and nonbusiness. Turbo tax self employed   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. Turbo tax self employed You can deduct only the business part. Turbo tax self employed If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis. Turbo tax self employed Example. Turbo tax self employed You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. Turbo tax self employed Only 4/11 of the expense qualifies as a business entertainment expense. Turbo tax self employed You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses. Turbo tax self employed Trade association meetings. Turbo tax self employed   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. Turbo tax self employed These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Turbo tax self employed Entertainment tickets. Turbo tax self employed   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Turbo tax self employed For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. Turbo tax self employed Exception for events that benefit charitable organizations. Turbo tax self employed   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. Turbo tax self employed You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply. Turbo tax self employed The event's main purpose is to benefit a qualified charitable organization. Turbo tax self employed The entire net proceeds go to the charity. Turbo tax self employed The event uses volunteers to perform substantially all the event's work. Turbo tax self employed    The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event. Turbo tax self employed Example 1. Turbo tax self employed You purchase tickets to a golf tournament organized by the local volunteer fire company. Turbo tax self employed All net proceeds will be used to buy new fire equipment. Turbo tax self employed The volunteers will run the tournament. Turbo tax self employed You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense. Turbo tax self employed Example 2. Turbo tax self employed You purchase tickets to a college football game through a ticket broker. Turbo tax self employed After having a business discussion, you take a client to the game. Turbo tax self employed Net proceeds from the game go to colleges that qualify as charitable organizations. Turbo tax self employed However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction. Turbo tax self employed Skyboxes and other private luxury boxes. Turbo tax self employed   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket. Turbo tax self employed   To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. Turbo tax self employed For example, renting a skybox for a series of playoff games is considered renting it for more than one event. Turbo tax self employed All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination. Turbo tax self employed   Related parties include: Family members (spouses, ancestors, and lineal descendants), Parties who have made a reciprocal arrangement involving the sharing of skyboxes, Related corporations, A partnership and its principal partners, and A corporation and a partnership with common ownership. Turbo tax self employed Example. Turbo tax self employed You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. Turbo tax self employed The cost of regular nonluxury box seats at each event is $30 a seat. Turbo tax self employed You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events). Turbo tax self employed Food and beverages in skybox seats. Turbo tax self employed   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. Turbo tax self employed The amounts separately stated for food and beverages must be reasonable. Turbo tax self employed You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals. Turbo tax self employed What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Turbo tax self employed Club dues and membership fees. Turbo tax self employed   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Turbo tax self employed This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities, discussed later. Turbo tax self employed   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Turbo tax self employed You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Turbo tax self employed Entertainment facilities. Turbo tax self employed   Generally, you cannot deduct any expense for the use of an entertainment facility. Turbo tax self employed This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Turbo tax self employed   An entertainment facility is any property you own, rent, or use for entertainment. Turbo tax self employed Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. Turbo tax self employed Out-of-pocket expenses. Turbo tax self employed   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. Turbo tax self employed These are not expenses for the use of an entertainment facility. Turbo tax self employed However, these expenses are subject to the directly-related and associated tests and to the 50% limit , all discussed earlier. Turbo tax self employed Expenses for spouses. Turbo tax self employed   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. Turbo tax self employed However, you can deduct these costs if you can show you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment. Turbo tax self employed Example. Turbo tax self employed You entertain a customer. Turbo tax self employed The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. Turbo tax self employed The customer's spouse joins you because it is impractical to entertain the customer without the spouse. Turbo tax self employed You can deduct the cost of entertaining the customer's spouse. Turbo tax self employed If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible. Turbo tax self employed Gift or entertainment. Turbo tax self employed   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Turbo tax self employed However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift. Turbo tax self employed   If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Turbo tax self employed You can treat the tickets as either a gift or entertainment, whichever is to your advantage. Turbo tax self employed   You can change your treatment of the tickets at a later date by filing an amended return. Turbo tax self employed Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Turbo tax self employed   If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Turbo tax self employed You cannot choose, in this case, to treat the tickets as a gift. Turbo tax self employed Prev  Up  Next   Home   More Online Publications