Business Trips

If you go on a trip that is primarily for business, and the destination is within the US, the full cost of travel to and from the destination is deductible even though not all of your time was spent on business. Meals and entertainment expenses on the days primarily related to business are 50% deductible. These expenses and any other expenses on days not primarily related to business are not deductible. If another person accompanies you for nonbusiness purposes, that person's expenses are not deductible. The rules are a little bit different when travel is to a destination outside the US.

• The per diem rates for travel can generally be used to substantiate properly documented business travel, but not if you own 10% or more of the stock of the paying corporation. In that case, you must substantiate the expense with actual receipts, although reimbursement can be made at the standard per diem rate, and will be excludible from income under an accountable reimbursement plan.
• The standard mileage rate for the business use of an automobile in 1998 is 32.5 cents per mile.
• Generally up to $18,500 in assets placed in service in a business in 1998 can be expensed under Code Section 179. This provision applies to personal property and does not apply to real property.
• Use Form 4562 to expense assets under Section 179. Do not make the mistake of merely expensing them. This will result in a disallowance of the expense by the IRS.
• Charitable contributions of $250 or more are deductible only if there is written proof of the deduction from the organization receiving the donation. The written proof should be obtained at the time the donation is made.
• If you employ domestic help and pay them over $1,000 during the year, the amount you pay them is subject to FICA and FUTA. Although you do not need to file payroll returns with the IRS quarterly, you may need to file quarterly reports with the state.
• One of the best but sometimes least used estate planning technique is the annual gift tax exclusion. Under the provisions of this exclusion you may gift up to $10,000 per individual per year tax free.
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