Page 43 - Small Business Taxes

16:29 - 11-Jan-2023
Page 37 of 53
Fileid: … tions/p334/2022/a/xml/cycle03/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
• Real estate taxes if you use an accrual method of ac- between the airport or station and your hotel, or between
counting and choose to accrue real estate tax related the hotel and your work location away from home.
to a definite period ratably over that period. Baggage and shipping. You can deduct the cost of
Sales tax. Treat any sales tax you pay on a service or on sending baggage and sample or display material between
the purchase or use of property as part of the cost of the your regular and temporary work locations.
service or property. If the service or the cost or use of the Car or truck. You can deduct the costs of operating
property is a deductible business expense, you can de- and maintaining your vehicle when traveling away from
duct the tax as part of that service or cost. If the property home on business. You can deduct actual expenses or
is merchandise bought for resale, the sales tax is part of the standard mileage rate (discussed earlier under Car
the cost of the merchandise. If the property is depreciable, and Truck Expenses), as well as business-related tolls
add the sales tax to the basis for depreciation. For infor- and parking. If you rent a car while away from home on
mation on the basis of property, see Pub. 551. business, you can deduct only the business-use portion of
Do not deduct state and local sales taxes im- the expenses.
! posed on the buyer that you must collect and pay Meals and lodging. You can deduct the cost of meals
CAUTION over to the state or local government. Do not in- and lodging if your business trip is overnight or long
clude these taxes in gross receipts or sales. enough that you need to stop for sleep or rest to properly
perform your duties. You can use actual expenses or the
, standard meal allowance to calculate your deduction. In

Excise taxes. You can deduct on Schedule C all excise most cases, you can deduct only 50% of your meal ex-
penses. However, business meals are 100% deductible if
taxes that are ordinary and necessary expenses of carry- the meals are food and beverages provided by a restau-
ing on your business. Excise taxes are discussed briefly in rant and paid or incurred after December 31, 2020, and
chapter 1. before January 1, 2023. See Pub. 463 for additional infor-

Fuel taxes. Taxes on gasoline, diesel fuel, and other mo- mation.
tor fuels you use in your business are usually included as Cleaning. You can deduct the costs of dry cleaning
part of the cost of the fuel. Do not deduct these taxes as a and laundry while on your business trip.
separate item.
You may be entitled to a credit or refund for federal ex- Telephone. You can deduct the cost of business calls
cise tax you paid on fuels used for certain purposes. For while on your business trip, including business communi-
more information, see Pub. 510. cation by fax machine or other communication devices.
Tips. You can deduct the tips you pay for any expense
Travel and Meals in this list.
More information. For more information about travel
This section briefly explains the kinds of travel and meal expenses, see Pub. 463.
expenses you can deduct on Schedule C. Reimbursing your employees for expenses. You can
Travel expenses. These are the ordinary and necessary generally deduct the amount you reimburse your employ-
expenses of traveling away from home for your business. ees for travel and meal expenses. The reimbursement you
You are traveling away from home if both the following deduct and the manner in which you deduct it depend in
conditions are met. part on whether you reimburse the expenses under an ac-
countable plan or a nonaccountable plan. For details, see
1. Your duties require you to be away from the general chapter 11 of Pub. 535. That chapter explains accounta-
area of your tax home (defined later) substantially lon- ble and nonaccountable plans and tells you whether to re-
ger than an ordinary day's work. port the reimbursement on your employee's Form W-2.
2. You need to get sleep or rest to meet the demands of
your work while away from home. Business Use of Your Home
Generally, your tax home is your regular place of busi-
ness, regardless of where you maintain your family home. To deduct expenses related to the part of your home used
It includes the entire city or general area in which your for business, you must meet specific requirements. Even
business is located. See Pub. 463 for more information. then, your deduction may be limited.
The following is a brief discussion of the expenses you
To qualify to claim expenses for business use of your
can deduct. home, you must meet the following tests.
Transportation. You can deduct the cost of travel by
airplane, train, bus, or car between your home and your 1. Your use of the business part of your home must be:
business destination. a. Exclusive (however, see Exceptions to exclusive
Taxi, commuter bus, and limousine. You can de- use, later),
duct fares for these and other types of transportation b. Regular, and

Chapter 8 Business Expenses Page 37