Holiday parties and tax reductions for employees

The holiday season comes with many festivals and office parties. Having a holiday party is fun. If you have a business and plan for your employees, it can be deductible expenses for your taxes. However, there are rules for deductions. This article will take the requirements that you will need to set up your tax office tax office for your employees.

Your tax revenue tax celebration for your employees must be for your employees. If only the employees and their family are present with the owners, this is probably a completely diminishing event. It simply can not be for you and your family. It can not be just for customers. For partners, the party is reduced to 100%, but if current employees are present, the party's nature changes and that amount can be reduced. If you do not invite employees to the party, it becomes complicated. It can be reduced, but not 100%. The main problem is whether the party falls to a 50% reduction in entertainment costs. If clients or independent contractors are present, the party is not fully reduced. It looks like this: If 50 employees and their spouses have party and 100 clients, half of the costs will be 100% and 50% (100 employees and 100 employees are not exposed). Likewise, if you invite a few neighbors to a party that is not a client or potential customer, you can not reduce the costs associated with any participant.

The party must be business-related, and that's best if it's in the office or elsewhere than at your home. There is no need for any business activity during the event; it just has to have a valid basis as an employee. If the IRS checks you and decides that it is a social function, that is a problem. You can not have a blocking block for your neighborhood, invite a few employees and take it as a business decline. Besides, the party should be what is too extreme. While it is required that all employees are required, a good idea should be to have PowerPoint presentations in the party, certain official hours for speech or business product display, etc. If non-involved employees are present, it helps to make sure that the event is valid for reducing it, because it's fun for those people.

Keep your receipts for all party expenses and when you give your taxpayers a yearly income and expenditure list, be sure that she knows that the expense for the employee is 100%, apart from other entertainment costs, which are not. If you provide a spreadsheet and everyone is considered fun, then he can not automatically know that part of it is an employee. Continue with the list of participants. name, address and more. Identify the participant's relationship with your business with this post (Ie client, contractor, employee, family). Draw while shooting. Keep this information within 3 years after submitting a tax report in case of an audit.

Source by James Coleman