Business Expense Tax Deductions: 12 Facts to Know

Related: 15 Capital Gains Tax Facts to Know

A business expense deduction is a deduction allowed for ordinary and necessary expenses paid or incurred in connection with an individual’s trade, business or profession.

The deduction allowed under Internal Revenue Code Section 62(a)(1) for expenses of a trade or business is the provision which technically allows for business income to be taxed on a net income basis, whether it be a corporate business or the business of individual taxpayers operating as sole proprietors or partners.

Are you advising your clients correctly when it comes to business expense deductions? In the gallery above are 12 important tax and financial planning questions and answers advisors should be aware of regarding business expense deductions, according to ALM’s Tax Facts Online.

(Graphics: Chris Nicholls/ALM)

___________________

Learn more with Tax Facts, the go-to resource that answers critical tax questions with the latest tax developments. Online subscribers get access to exclusive e-newsletters.
Discover more resources on finance and taxes on the NU Resource Center.
Follow Tax Factson LinkedIn and join the conversation on financial planning and targeted tax topics.
Get 10% off any Tax Facts product just for being a ThinkAdvisor reader! Complete the free trial form or call 859-692-2205 to learn more or get started today.

Business Expense Tax Deductions: 12 Facts to Know

Related: 15 Capital Gains Tax Facts to Know

Emily Holbrook

SALT Cap Is Poised to Get Looser as Democrats Debate Tax Relief

More on this topic

Two Ways Advisors Can Add Value, Without Picking Stocks

Only 26% of Americans Have an Estate Plan

10 States With the Most Income Tax Writeoffs

Top Lawmakers 'Pulling Out All the Stops' to Pass Tax Bill With 100% Bonus Depreciation

1. Is a taxpayer entitled to deduct business travel expenses?

2. When is a taxpayer considered to be “away from home” for purposes of deducting business travel expenses? What if the taxpayer is away for an extended period of time for business reasons?

3. Can a taxpayer deduct business travel expenses if they travel so frequently that they have no “tax home”?

4. Are business-related travel expenses deductible if a taxpayer resides in a location that is far from the taxpayer’s principal place of business?

5. Is a taxpayer entitled to a deduction for travel expenses when the taxpayer has multiple places of business?

6. Can a taxpayer deduct travel expenses for a trip that has both business and personal elements?

7. Can an employer deduct moving expenses for which it reimburses its employees? Are reimbursed moving expenses included in the taxpayer-employee’s gross income?

8. Is a taxpayer entitled to claim a deduction for business-related education expenses?

9. When is a business-related entertainment or meal expense “ordinary and necessary” so that it may be deducted?

10. What limitations apply to prevent a taxpayer from deducting lavish or extravagant business-related entertainment expenses?

11. When is a taxpayer entitled to deduct expenses incurred in maintaining a home office?

12. How does an employer’s reimbursement or failure to reimburse an employee’s expenses impact a taxpayer’s business expense deductions?

10 States With the Most Income Tax Writeoffs

The Advisor's Guide to Overcoming Prospecting Excuses

9 Traps to Avoid With Planning Tools: CFP Board

33 Cheap Stocks to Buy in Q2: Morningstar

Featured Resources

Candid Conversations: Couples, Money & Conflict

Helping Your Clients Make a Greater Philanthropic Impact

Index Year End Review: 2023

RIA Investment Trends

Business Expense Tax Deductions: 12 Facts to Know

Share with Email

Thank you for sharing!

Related: 15 Capital Gains Tax Facts to Know

More on this topic

1. Is a taxpayer entitled to deduct business travel expenses?

2. When is a taxpayer considered to be “away from home” for purposes of deducting business travel expenses? What if the taxpayer is away for an extended period of time for business reasons?

3. Can a taxpayer deduct business travel expenses if they travel so frequently that they have no “tax home”?

4. Are business-related travel expenses deductible if a taxpayer resides in a location that is far from the taxpayer’s principal place of business?

5. Is a taxpayer entitled to a deduction for travel expenses when the taxpayer has multiple places of business?

6. Can a taxpayer deduct travel expenses for a trip that has both business and personal elements?

7. Can an employer deduct moving expenses for which it reimburses its employees? Are reimbursed moving expenses included in the taxpayer-employee’s gross income?

8. Is a taxpayer entitled to claim a deduction for business-related education expenses?

9. When is a business-related entertainment or meal expense “ordinary and necessary” so that it may be deducted?

10. What limitations apply to prevent a taxpayer from deducting lavish or extravagant business-related entertainment expenses?

11. When is a taxpayer entitled to deduct expenses incurred in maintaining a home office?

12. How does an employer’s reimbursement or failure to reimburse an employee’s expenses impact a taxpayer’s business expense deductions?

Featured Resources

Connect with ThinkAdvisor